HDFC Bank Q3 Review— Inline; Asset Quality Blips Amid Seasonality; Motilal Oswal Retains 'Buy' On The Stock

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Motilal Oswal Report

HDFC Bank Ltd. reported Q3 FY25 net profit of Rs 167.4 billion (2.2% YoY growth, in line). Net interest income grew 7.7% YoY to Rs 306.5 billion (in line). Net interest margins contracted 3bp QoQ to 3.43%.

Other income stood at Rs 114.5 billion (3% YoY growth, in line). Opex grew 1.3% QoQ, while the C/I ratio stood flat at 40.6%.

Provisions declined 25% YoY to Rs 31.5 billion. The bank utilized Rs 3 billion of contingent provisions and holds total provisions (floating and contingent) of Rs 259 billion.

Gross non-performing asset/net non-performing asset ratio increased 6bp/5bp QoQ to 1.42%/0.46%, respectively. PCR decreased 207bp QoQ to 67.8%. Fresh slippages stood at Rs 88 billion (however, excl agri, it stood stable at Rs 65 billion).

Advances book grew 3% YoY / 1% QoQ to Rs 25.2 trillion; deposits grew 16% YoY /3% QoQ to Rs 25.6 trillion. CD ratio declined to 98.2%, while CASA ratio declined to 34%.

We lower our earnings estimate for FY26/27 by 3% each and estimate HDFC Bank to deliver FY26E RoA/RoE of 1.8%/13.9%. Reiterate Buy with a target price of Rs 2,050 (2.3x FY27E ABV plus Rs 294 for subs).

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