Sequential Growth in Consolidated Net Profit

HDFC Bank’s consolidated net profit for the third quarter of FY24 witnessed a sequential growth of 2.6%, reaching ₹17,257 crore compared to ₹16,811 crore in the second quarter. However, it’s essential to note that year-on-year comparisons are not feasible due to the merger with HDFC in July last year.

Revenue and Income Metrics

The bank’s total income rose by 6.9% to ₹1,15,015 crore from ₹1,07,566 crore in the previous quarter, surpassing street expectations. On a standalone basis, net interest income grew by 3.9% to ₹28,470 crore, slightly below analysts’ predictions. Provisions and contingencies increased to ₹4,603 crore from ₹3,311 crore in Q2.

Asset Quality and Operational Performance

Gross non-performing assets (NPAs) improved sequentially, standing at 1.26% of gross advances compared to 1.34% in September. Net NPAs were at 0.34% of net advances. Pre-provision operating profit (PPOP) grew by 4% sequentially, amounting to ₹23,650 crore.

Deposit and Loan Growth

Total deposits surged by 27.7%, with CASA deposits growing by 9.5% year-on-year. Gross advances saw a substantial increase of 62.4% due to the merger, reflecting a robust balance sheet with assets totaling ₹34,82,600 crore as of December 2023.

Analyst Expectations and Market Outlook

Nomura projected a 6% sequential rise in net interest income and a 3% drop in profit after tax quarter-on-quarter. Emkay anticipates a recovery in net interest margins (NIMs) from the lows of the second quarter, driven by credit revival and deposit adjustments. Conversely, BoBCaps expects margin contraction due to higher term deposit rates offsetting benefits from excess liquidity absorption.

Conclusion

HDFC Bank’s third-quarter performance demonstrates resilience amid challenging market conditions, with notable improvements in revenue, asset quality, and operational efficiency. While analysts hold divergent views on specific metrics, the bank’s strategic position and robust financial fundamentals position it for continued growth and stability in the evolving banking landscape.