A quick recap of HDFC Bank Q4 Results, brokerage views, stock targets & more

HDFC Bank reported a standalone net profit of Rs 16,511.8 crore for the January-March period, up 37.1 per cent compared with the corresponding period a year ago and better than analysts’ expectations. Zee Business analysts had pegged HDFC Bank’s fourth-quarter net profit at Rs 15,800 crore. 

HDFC Bank logged net interest income of Rs 29,076.8 crore for the March quarter, up 24.5 per cent on a year-on-year basis. Zee Business analysts had estimated the lender’s NII at Rs 29,300 crore. 

NII is the difference between the interest earned and the interest paid. It is a key metric to measure the income of lenders. 

HDFC Bank registered a net interest margin (NIM) of 3.44% for the quarter ended March 31, 2024, as against 3.4% for the October-December period. 

According to Zee Business research, the private sector lender was estimated to maintain its NIM at the same level as the previous quarter in the January-March period, at 3.4 per cent. 

NIM is a key measure of profitability. 

The lender’s asset quality worsened slightly compared with the previous quarter. Its gross non-performing assets (GNPAs) as a percentage of total loans stood at 1.24% in Q4 as against 1.26% in Q3. However, its net non-performing assets (NNPAs) increased to 0.33% in Q4 from 0.27% in Q3.

The lender registered provisions and contingencies to the tune of Rs 13,511.6 crore in Q4, up more than three times on a year-on-year basis and more than three times sequentially "as a countercyclical buffer for making the balance sheet more resilient". It made floating provisions of Rs 10,900 crore in the March quarter.

The bank's gross loans increased 1.6% sequentially to Rs 25.08 lakh crore in Q4, slower than in the previous quarter, though deposits grew 7.5% sequentially to Rs 23.8 lakh crore. Its loan-to-deposit ratio, a measure of liquidity and lending capacity, improved on a quarter-on-quarter basis helped by strong deposit growth and a pullback in loan growth.

The ratio indicates the percentage of a bank's deposits that are being lent out as loans. A higher ratio suggests that the bank is more aggressive in lending, potentially leading to higher profits but also higher risk, and vice versa.

HDFC Bank declared a dividend of Rs 19.5 per equity share out of the net profits for the year ended March 31, 2024.

The board fixed May 10 as the record date for the dividend, subject to shareholders' approval.

Zee Business Managing Editor Anil Singhvi said the sequential improvement in the NIM tagged by HDFC Bank was a positive surprise while strong deposit was a big relief. 

Jefferies has maintained a 'buy' call on HDFC Bank after the earnings announcement and raised its target price for the stock to Rs 1,880 from Rs 1,800. 

The bank's quarterly profit was below the estimates though its pre-provision operating profit (PPoP) was in line with expectations while the slight rise in the NIM was a key positive, according to the brokerage.

HDFC Bank's deposit growth was strong but loan growth lagged, according to Jefferies.

While retaining its rating for HDFC Bank at 'overweight', JPMorgan has reduced its target for the Nifty Bank stock to Rs 1,800 from Rs 1,900.