HDFC Bank on Monday, October 16, reported a 9.3% rise in net profit at ₹15,976 crore for quarter ending September 2023 compared to CNBC-TV18's poll of ₹14,616.5 crore. However, it is important to note that these numbers are not directly comparable on a quarter-on-quarter (QoQ) or year-on-year (YoY) basis due to the lender's merger with Housing Development Finance Corporation (HDFC) on July 1, 2023.

The bank's net interest income (NII) for the quarter stood at ₹27,385 crore, slightly below CNBC-TV18's projected NII of ₹28,187.4 crore.

HDFC Bank also disclosed key asset quality metrics, including gross non-performing assets (NPAs) at ₹31,578 crore, representing 1.34% of gross advances, and net NPA at ₹8,073 crore, accounting for 0.35% of net advances. Additionally, the bank set aside provisions totaling ₹2,904 crore.

HDFC Bank's return on assets (RoA) was reported at 1%, annualised at 2% for the first half of FY24. The net interest margin was at 3.4%, while the core net interest margin stood at 3.65%. The bank's pre-provision operating profit reached Rs 22,694 crore. The gross advances stood at 23.54 lakh crore.

Commenting on the numbers, Srinivasan Vaidyanathan, Chief Financial Officer at HDFC Bank, highlighted a significant milestone, stating that HDFC Bank's total customer base now stands at a remarkable 9.1 crore post-merger. He further revealed that HDFC Bank had added over 16,000 employees in the recent quarter.

Vaidyanathan disclosed that the bank's total deposits have reached a substantial ₹21.7 lakh crore and pointed out that advances have reached ₹23.5 lakh crore, with a sequential addition of ₹1.1 lakh crore in Q2. He, however, acknowledged the impact on net interest margins (NIMs) and attributed the change to the merger. He explained that HDFC Bank's NIMs before the merger were at a higher 4.1%. The merger led to a liquidity build-up, which had a 25-30 basis point impact on NIMs.

Notably, Vaidyanathan revealed that approximately 22 basis points of the 1.34% of gross NPAs are currently classified as NPAs due to restructuring, despite their positive performance.

Ashutosh Mishra, Head Of Research, Institutional Equities At Ashika Stock Broking, lauded HDFC Bank's performance on the bottomline, but expressed some concern regarding the NIM.

Mishra also highlighted the bank's asset quality, stating, "There is no negative surprise on the asset quality front." He pointed out a positive surprise regarding the return on assets (RoA), stating, "quarterly RoA is at 0.50%, which is annualised at 2% levels, whereas the market was anticipating roughly 1.8-1.9%." He further emphasised, "So if they are able to sustain RoA at the 2% level, then the underperformance of the bank will come down going forward."

Prakash Diwan, a market expert, observed that HDFC Bank's financial numbers were in line with the market's expectations. He, however, highlighted that the bank had previously cautioned about a slower pace in the performance of the merged entity.

He stated, "Five weeks back, they had cautioned everybody about a little bit of a slow offtake in terms of the merged entity getting back to its optimal level of performance, and that is exactly what is reflecting in NIMs." Diwan concluded by stating, "So I won't read too much disappointment in these numbers."

The shares of HDFC Bank settled 0.47% lower at ₹1,529.50 at the BSE.

(Edited by : Shoma Bhattacharjee)

First Published:Oct 16, 2023 4:16 PM IST