HDFC Bank posts in-line Q3 profit on higher net interest income

HDFC Bank on Wednesday (January 22, 2025) reported third-quarter profit largely in-line with analysts’ estimates, helped by an increase in net interest income (NII).

The country’s biggest private lender posted a standalone net profit of 167.36 billion rupees ($1.94 billion) for the quarter ended Dec. 31., down about 0.5% from the previous quarter.

Analysts, on average, expected a profit of 167.48 billion rupees, according to data compiled by LSEG.

The bank’s results are not comparable on a year-to-year basis as it merged with its parent HDFC in July 2023.

HDFC Bank’s NII — the difference between interest earned and paid — rose 2% from the previous quarter to 306.53 billion rupees, as per Reuters calculations.

Deposits rose 4.2% to 24.53 trillion rupees, slowing from a 5.1% rise in July-September.

Meanwhile, gross advances, or loans sanctioned and disbursed, rose 0.9% to 25.43 trillion rupees, slowing from 1.3% growth in the previous quarter.

Also, the HDFC Bank’s Q3 core net interest margin stands at 3.43% on total assets and at 3.62% on interest earning assets  

HDFC Bank’s merger added a large pool of loans to its portfolio but a much smaller amount of deposits, putting it under pressure to increase the pace of raising deposits or slow loan growth.

Over the past few months, it has offered retail loans for sale to reduce its loan-to-deposit ratio, a key metric for banks to assess their liquidity position by gauging whether they have enough deposits to fund loan growth.

HDFC Bank’s provisions for bad loans and other contingencies rose 17% sequentially to 31.54 billion rupees.

Its gross non-performing assets ratio was at 1.42% at the end of December, compared to 1.36% in the previous quarter.

The bank's shares, which were trading 0.7% lower ahead of the results, were last up 1%. ($1 = 86.3950 Indian rupees)