HDFC Bank Q3 Results & Share Price Highlights: Net profit up 2%; shares end nearly 2% positive

HDFC Bank, India’s largest private sector lender, posted third-quarter profits that came in line with market expectations even as its gross bad loans increased.

Net income rose 2.3% to 167.4 billion rupees ($1.9 billion) in the three months ended December 31 from a year ago, according to a statement Wednesday. That compared with the average analyst estimate of 166.57 billion rupees in a Bloomberg survey.

Indian lenders are reporting higher funding costs as they struggle to attract cheap retail deposits. Banks are also grappling with rising bad loans as economic growth slows and urban consumption weakens.

HDFC has been shrinking its retail loan portfolio as it seeks to improve its credit-deposit ratio that shot up after its merger with Housing Development Finance Corp in 2023.

The bank’s gross bad loans increased to 1.42% in the December quarter, surpassing analyst estimates of 1.37% while its provisions registered a 17% growth over the previous quarter. 

Bloomberg

The bank’s standalone net profit for the quarter ended December 2024 stood at ₹16,735.50 crore as compared to ₹16,372.54 crore in the corresponding quarter previous year.

India’s HDFC Bank on Wednesday reported third-quarter profit largely in-line with analysts’ estimates, helped by an increase in net interest income (NII).

The country’s biggest private lender posted a standalone net profit of 167.36 billion rupees ($1.94 billion) for the quarter ended Dec. 31., down about 0.5% from the previous quarter.

Analysts, on average, expected a profit of 167.48 billion rupees, according to data compiled by LSEG.

The bank’s results are not comparable on a year-to-year basis as it merged with its parent HDFC in July 2023.

HDFC Bank’s NII - the difference between interest earned and paid - rose 2% from the previous quarter to 306.53 billion rupees, as per Reuters calculations.

Deposits rose 4.2% to 24.53 trillion rupees, slowing from a 5.1% rise in July-September.

Meanwhile, gross advances, or loans sanctioned and disbursed, rose 0.9% to 25.43 trillion rupees, slowing from 1.3% growth in the previous quarter.

HDFC Bank’s merger added a large pool of loans to its portfolio but a much smaller amount of deposits, putting it under pressure to increase the pace of raising deposits or slow loan growth.

Over the past few months, it has offered retail loans for sale to reduce its loan-to-deposit ratio, a key metric for banks to assess their liquidity position by gauging whether they have enough deposits to fund loan growth.

HDFC Bank’s provisions for bad loans and other contingencies rose 17% sequentially to 31.54 billion rupees.

Its gross non-performing assets ratio was at 1.42% at the end of December, compared to 1.36% in the previous quarter.

The bank’s shares, which were trading 0.7% lower ahead of the results, were last up 1%.

Reuters

HDFC Bank recorded it’s consolidated net profit for the quarter ended Dec 2024 at ₹17,656.61 crore as against ₹17,258.87 crore in the corresponding quarter previous year. 

Shares gain 1.47% to ₹1,666.60 on the NSE.

“Deposit growth (of HDFC Bank) will be better than credit growth helping improve credit-deposit ratio (CD). Credit growth is significantly below industry growth and margins are likely to remain stable QoQ with a slight positive bias,” said Axis Securities in a report.

Brokerages have slashed target prices, disappointed by the VNB (value of new business) growth margins as the product mix evolved negatively.

Read more here; Click to follow Q3 results live here

Shares traded at ₹1,645.90 on the NSE, up 0.21% as at 11.10 am.

Day’s high: ₹1,654.90

Day’s lowe: ₹1,639

Previous close: ₹1,642.40

Open: ₹1,642.40

Shares of HDFC Bank traded flat on the NSE at ₹1,644.20 as at 10.37 am. 

Mcap: ₹12,57,536.04 crore

Shares of HDFC Bank traded flat on the NSE at ₹1,652.15 as at 10.13 am.

Commentary on credit, deposit growth and margin trajectory eyed

Read the report by Piyush Shukla of businessline here