India’s HDFC Bank posts bigger-than-expected jump in Q1 profit

HDFC Bank, India’s largest private lender, on Monday (Jul 17) reported a bigger-than-expected 30 per cent jump in first-quarter profit, helped by higher net interest income (NII) and strong loan growth.

The lender’s standalone net profit was at 119.52 billion rupees (S$1.9 billion), up from 91.96 billion rupees a year ago. Analysts had expected a profit of 114.97 billion rupees, as per Refinitiv data.

The standalone numbers do not include the business of the bank’s subsidiaries.

The results come weeks after the bank completed a merger with parent Housing Development Finance Corp (HDFC) in a US$40 billion deal aimed at tapping rising demand for home loans.

The lender saw advances rise 15.8 per cent during the quarter, while deposits rose at a faster pace of 19.2 per cent.

Post the merger, the share of retail and wholesale book of the bank was at 57 per cent and 43 per cent respectively, HDFC Bank’s chief financial officer Srinivasan Vaidyanathan said in a conference call.

The bank will continue to grow the retail book going forward, and focus will also be on products such as construction finance, and certain corporate loans among others, Vaidyanathan said.

HDFC’s deposits have been transitioned into those of HDFC Bank beginning Jul 1, he said. HDFC had retail liabilities worth 1.3 trillion rupees and non-retail liabilities worth 390 billion rupees as on June 30, he added.

HDFC Bank’s NII, or core lending income, rose 21.1 per cent to 235.99 billion rupees. Net interest margin was at 4.1 per cent, the bank said in a press release.

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Asset quality was largely stable, with gross non-performing assets (NPA) ratio slipping slightly to 1.17 per cent from 1.12 per cent in the prior quarter. The figure stood at 1.28 per cent a year ago.

Provisions and contingencies, or the funds set aside to cover loan losses, slipped 10.3 per cent to 28.6 billion rupees.

Shares of the lender ended 2.07 per cent higher on the BSE on Monday.