Profit climbed to ₹11,951.7 crore, beating estimates of ₹11,375.1 crore drawn from analysts polled by Bloomberg. The bank, which merged with its mortgage-lending parent HDFC from July 1, had posted profits of ₹9,196 crore in the same period last year. ETIG data showed that the bank had last posted a 30% profit growth in December 2019.
HDFC Bank, now with the highest weighting on the Nifty because of the stock’s free float, will report consolidated performance data from the September quarter. The combined entity posted a 13% rise in loans as of June 30 to ₹22.45 lakh crore, said a July 5 exchange filing.
The lender’s core income, or net interest income earned on advances after deducting the cost of funds, expanded more than a fifth on year to ₹23,599 crore at the end of the June quarter.
“The quarter we operated in had a stronger than expected economic tailwind with a stronger than expected GDP growth. Payment systems indicate that business activity continues to be robust,” said Srinivasan Vaidyanathan, chief financial officer, HDFC Bank.
“We continue to see healthy domestic demand conditions and capex push from the government augurs well.”
He was confident that the merged entity will meet all the stipulated reserves thresholds, with return on assets remaining around the 2% ballpark.Stable Margins
Net interest margin (NIM) came in at 4.1% and has remained within the 4-4.2% range for 12 quarters now.
“Nothing seems to move the NIM beyond the 4-4.2% range seen in the last 3 years – sharp rate hikes, fluctuations in CASA (Current Account Savings Account) ratios, switch to the corporate segment and back,” said Pranav Gundlapalle, head, India Financials, Bernstein.
“The headline deposit growth of 19% falls short of what would be required after the merger. However, given that it’s being led by retail deposits with wholesale deposits sequentially declining, it is not a worrying sign.”
Total deposits expanded to 19.13 lakh crore at the end of June quarter, a growth of 19.2% over the same period last year. CASA deposit ratio comprised 42.5% of total deposits as of June 30, 2023. Total loans expanded 15.8% to 16.15 lakh crore in which domestic retail loans climbed 20%, commercial and rural banking loans 29.1% and corporate and other wholesale loans 11.2%. “The big issue this quarter has been weak incremental deposit market share. As per our calculations, it has been sub-5%,” said Suresh Ganapathy, associate director, Macquarie Capital. “Deposit growth has been weaker than industry.” Gross non-performing asset ratio was at 1.17% versus 1.28% while net non-performing asset ratio stood at 0.30%. Provisions for the quarter fell 10.2% on-year to 2,860 crore.
The bank added 1,482 branches and 1,722 ATMs in the past 12 months. The bank management said that in the medium to long term, distribution will be the key and will provide funding through better engagement. The bank has added over 29,000 people in last 12 months, though it saw a high attrition rate of over 50% for junior level jobs.
