HDFC Bank Q2 PAT up 5% on higher NII

Private sector major HDFC Bank on Saturday reported 5 per cent year-on-year (y-o-y) and 4 per cent quarter-on-quarter (q-o-q) growth in Q2FY25 net profit at ₹16,821 crore, aided by higher net interest income (NII).

The lender’s NII grew 10 per cent y-o-y to ₹30,110 crore,other income rose 7 per cent to ₹11,480 crore,whereas net interest margin (NIM) stood flat q-o-q at 3.5 per cent. The bank is in a “reasonable” range of NIM as of now, CFO Srinivasan Vaidyanthan said at a post earnings conference.

Deposit mobilisation

Apart from the bank’s NIM — which fell from over 4 per cent level after it concluded merger of erstwhile HDFC with itself — analysts have been closely tracking HDFC Bank’s deposit mobilisation guidance as its credit-deposit (CD) ratio is near 100 per cent level.

“On an incremental basis, historically we have seen 15-18 per cent (growth in deposit), which will give you about 50-70 basis points (bps) market share growth which we have seen over 3-5 year period...that is the kind of positioning we have put the bank in, to keep gaining this market share...,” the CFO said.

Core business

HDFC Bank’s overall deposits stood at ₹25 lakh crore in Q2FY25, 15 per cent up y-o-y, whereas gross advances rose 7 per cent YoY to ₹25.19 lakh crore.The bank’s MD & CEO Sashidhar Jagdishan said the lender would post lower loan growth than average banking sector credit growth in FY25, grow loans on par with industry in FY26, and higher than industry level credit growth in FY27.

The bank’s CD ratio, which stood at near 86-87 per cent level before merger of erstwhile HDFC with the bank, rose to 110 per cent post merger and will likely moderate to higher 80 per cent mark over next 2-3 years, CFO Vaidyanathan said in an analyst call.

Lastly, HDFC Bank’s gross and net bad loan ratio rose slightly to 1.4 per cent and 0.4 per cent in Q2FY25, respectively, from 1.4 per cent and 0.3 per cent in the previous quarter.