Latest News: HDFC Bank Q1 Financial Update
HDFC Bank, a leading name in the private banking sector of India, has revealed its financial performance for the first quarter of the 2024-25 fiscal year. The bank reported a consolidated net profit of Rs 16,474.85 crore for the April-June quarter, marking a 6.51% decline from the previous quarter’s profit of Rs 17,622.38 crore. This decrease is primarily attributed to higher tax expenditures and a reduction in other income segments.
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On a standalone basis, the profit after tax for the specified quarter was recorded at Rs 16,174.75 crore, slightly down from Rs 16,511.85 crore in the preceding January-March quarter. However, when compared year-over-year, the bank’s net profit showcased a significant 33% increase from Rs 12,370.38 crore in the June quarter of the previous fiscal year.
The bank’s core net interest income saw a modest growth of 2.6%, reaching Rs 29,840 crore, aided by a minor increase in net interest margins from 3.44% to 3.47%. Despite this, HDFC Bank experienced a 41.3% fall in non-interest income, which stood at Rs 10,670 crore due to a downturn in fee income and trading mark to market lines.
In terms of deposit growth, HDFC Bank reported a 4.6% sequential increase, leveraging its widespread network of over 8,800 branches. The bank maintained a cautious stance on deposit pricing strategies, even as it observed a dip in current account balances following heightened expenditure by businesses post the previous quarter’s deposit influx.
The lending landscape showed a higher retail loan book share at 56%, with the bank facing competitive pressures and thin spreads on the wholesale front, leading to a 5.3% reduction in the overall wholesale book. Despite these challenges, the bank continues to monitor its unsecured credit exposures, particularly in the realms of credit cards and personal loans, maintaining robust asset quality.
Asset quality metrics indicated a slight uptick in gross non-performing assets ratio to 1.33% from 1.24%, with gross slippages at Rs 7,900 crore. Conversely, provisions were considerably lower at Rs 2,602 crore, attributable to a strategic provisioning in the prior quarter following a stake sale in the education loan arm.
The substantial tax outlay of Rs 5,107 crore, a stark contrast to the write-back of Rs 749 crore in the previous quarter, played a significant role in the net profit dip. Furthermore, the bank executed a Rs 5,000 crore mortgage portfolio securitisation in the June quarter as part of a broader strategy to manage credit and deposit ratios, which remain stable at 104%.
Notably, the bank’s capital adequacy is robust at 19.33%, and its board has greenlit the initial public offering (IPO) for its non-bank subsidiary, HDB Financial Services, aiming for completion by September 2025. HDFC Bank remains open to strategic stake sales apart from the IPO to bolster its financial standing.
Subsidiary performance varied, with HDB Financial Services recording a marginal 2.6% profit growth, HDFC Life’s profits increasing by 15%, and HDFC Ergo experiencing a decrease in profits to Rs 130 crore from Rs 200 crore.
In summary, HDFC Bank’s first-quarter results depict a mixed financial performance, with strategic maneuvers aimed at maintaining stability and growth amidst competitive and operational challenges.
