HDFC Bank Q3 consol net profit grows 2.6% sequentially to over ₹ 17,000 crore

• HDFC’s total income went up by 6.9% sequentially to ₹1,15,015 crore.
• Its net interest income grew 3.9% QoQ to ₹28,470 crore from ₹27,385 crore in the September quarter.
• Its gross NPAs stood at 1.26% of gross advances as compared to 1.34% in Q2.
  

HDFC Bank’s third quarter consolidated net profit went up 2.6% sequentially to ₹17,257 crore from ₹16,811 crore in the second quarter of FY24. The year on year numbers are not comparable as HDFC Bank merged with HDFC as of July last year.

The reading is better than what the street expected as most analysts predicted a marginal sequential drop in profits. Its total income went up by 6.9% to ₹1,15,015 crore as compared to ₹1,07,566 crore in the second quarter.

On a standalone basis, its net interest income grew 3.9% to ₹28,470 crore from ₹27,385 crore in the September quarter. This was less than what the street was expecting. Provisions and contingencies for the quarter stood at ₹4,603 crore versus ₹3,311 crore in Q2.

Gross non-performing assets (NPAs) saw an improvement sequentially as they stood at 1.26% of gross advances as compared to 1.34% as of September end. Net NPAs were at 0.34% of net advances for the third quarter.

Pre-provision operating profit (PPOP) came in at ₹23,650 crore which grew 4% sequentially.

Total deposits grew 27.7% while CASA deposits grew 9.5% on a year on year basis. Gross advances saw an increase of 62.4% YoY due to the effects of the merger. The balance sheet as of December 2023 stands at ₹34,82,600 crore.

Source: Balance sheet, press release

Nomura expected the bank to report a 6% sequential rise in net interest income and a 3% drop in profit after tax QoQ. Yearly growth is not comparable for the bank due to its merger with HDFC in July last year.

Most banks are expected to see margin contraction, lack of treasury gains, and higher opex including staff cost and franchise cost in the third quarter. Emkay expects HDFC Bank’s net interest margins (NIMs) to recover from their lows seen in the second quarter.

“HDFC reported strong credit revival of around 5% QoQ, but deposit growth has been lower of 2% QoQ, which we believe could be due to the unwinding of ICRR and should help the bank witness some margin recovery from the lows of Q2,” said Emkay.

BoBCaps on the other hand expected its benefits from absorption of excess liquidity in the books likely to be offset by higher term deposit rates, leading to contraction in net interest margins.

“Credit cost to remain stable. Expect minor YoY improvement in gross non-performing assets (GNPA) and net non-performing assets (NNPA) with controlled slippages,” BoBCaps said.