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HDFC Bank has reported a 35 per cent year-on-year (y-o-y) increase in first quarter standalone net profit at ₹16,175 crore even as it has taken first steps to correct the high credit-deposit (CD) via transfer of loans through assignment in the reporting period.
The bottomline of India’s largest private sector bank was supported by healthy growth in net interest income (NII) and other income, and decline in non-tax provisions. The lender had posted a net profit of ₹11,952 crore in the year ago quarter.
In a bid to bring down the high C-D ratio, which was the result of merger of HDFC with HDFC Bank with effect from July 1, 2023, of about 105 per cent to the pre-Covid level of 80-85 per cent, the bank transferred loans aggregating ₹5,445 crore through assignment in Q1FY25.
CFO Srinivasan Vaidyanathan said the bank has done a loan assignment transaction after almost a decade. Such direct assignment and securitisation transactions will be undertaken as and when opportunities arise.
NII (interest earned less interest expended) in the reporting quarter rose about 26 per cent to ₹29,837 crore (₹23,599 crore).
Other income (comprising fees & commissions, foreign exchange & derivatives revenue, net trading and mark-to-market gain, and miscellaneous income) was up about 16 per cent at ₹10,668 crore (₹9,230 crore). Non-tax provisions declined 9 per cent to ₹2,602 crore (₹2,860 crore).
Asset quality down
There was slight deterioration in asset quality, with gross non-performing assets (GNPAs) increasing to 1.33 per cent of gross advances in Q1FY25 from 1.24 per cent in Q4FY24. Net NPAs, too, edged up to 0.39 per cent of net advances from 0.33 per cent.
Net interest margin edged up marginally to 3.50 per cent from 3.47 per cent in the preceding quarter.
Deposits increased by about 24 per cent to ₹23,79,100 crore. Low-cost CASA (current account, savings account) deposits declined to 36 per cent of domestic deposits from 42 per cent in the year ago quarter.
Gross advances jumped about 53 per cent y-o-y to ₹24,86,900 crore. Retail loans grew by about 100 per cent, commercial and rural banking loans were up by 23 per cent, and other wholesale loans increase by about 19 per cent.
Meanwhile, HDFC Bank’s board provided an in-principle approval to initiate the process of listing HDB Financial Services (HDBFS) through a potential initial public offer. The bank has 94.64 per cent stake in the NBFC.
Srinivasan said as per regulations, HDBFS has to be listed by September 2025.
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