HDFC Bank, India's largest private lender, beat quarterly profit forecasts on Saturday as loan-loss provisions fell even while loan growth slowed from the previous three months.
The Mumbai-based lender posted a standalone net profit of ₹16,175 crore ($1.93 billion) for the April-June quarter.
That was above analysts' forecast of ₹15,744 crore, according to LSEG data, but it was down 2% from the previous quarter, largely due to higher tax expenses.
HDFC Bank merged with parent Housing Development Finance Corp in July 2023, so its results are not comparable on a year-over-year basis.
Provisions and contingencies plunged to ₹2,602 crore during the quarter from ₹13,512 crore in the three months to March.
The bank's net interest income - the difference between interest earned and paid - rose 2% from the previous quarter to ₹29,837 crore .
Its core net interest margin was 3.47% on total assets and 3.66% on interest-earning ones, versus 3.44% and 3.63%, respectively, in the previous quarter.
The merger with HDFC added a large pool of mortgage loans to the bank's portfolio but a much smaller amount of deposits. This has put it under pressure to increase the pace at which it raises deposits or slow loan growth.
HDFC Bank's gross loans dipped 0.8% sequentially, while deposits were flat on quarter at 2.38 trillion rupees.
The bank's asset quality deteriorated, with a gross non-performing assets ratio of 1.33% at the end of June, compared with 1.24% three months earlier.