HDFC Bank Q4 Results: Private lender misses quarterly profit forecast, margins stable

HDFC Bank, India's largest private lender, posted smaller-than-expected quarterly profit on Saturday as it made higher provisions against potential bad loans, while its lending margins were stable.

HDFC Bank, the first of its peers to report results, posted a standalone net profit of 165.12 billion rupees ($1.98 billion) for the January-March quarter.

That was below analysts' forecast of 173.15 billion rupees, according to LSEG data, but above the 163.73 billion rupees reported in the previous quarter.

HDFC Bank merged with parent Housing Development Finance Corp in July, meaning its results are not comparable on a year-over-year basis.

Provisions and contingencies were 135.1 billion rupees during the quarter, up from 42.17 billion rupees in the three months to December "as a countercyclical buffer for making the balance sheet more resilient," the bank said in a press release.

Provisions for the January-March quarter included floating provisions of 109 billion rupees, it said.

The bank's net interest income - the difference between interest earned and paid - rose 2.1% from the previous quarter to 290.8 billion rupees.

Its core net interest margin was 3.44% on total assets and 3.63% on interest-earning ones, versus 3.4% and 3.6%, respectively, in the previous quarter and a blended 4.1% in the same quarter last year.

HDFC's higher borrowing costs and lower-yielding loan book weighed on the merged entity's margins. Analysts had expected the lender to slow loan growth in favour of deposit growth until it restored key ratios to pre-merger levels.

HDFC Bank's gross loans grew 1.6% sequentially to 25.08 trillion rupees in the latest quarter, slower than in the previous quarter. Deposits grew 7.5% to 23.8 trillion rupees.

The bank's asset quality remained stable, with a gross non-performing assets ratio of 1.24% at the end of March, compared with 1.26% three months earlier.

HDFC Bank's shares ended 2.5% higher ahead of the results on Friday.