HDFC Bank Q4 Results: Operating Profit Down By 9% Led By Lower Other Income

A fall in other income and some rise in expenses led HDFC Bank to report a fall in operating profit by over 9% on the year to Rs 26,537 crore for the quarter ended March.

During Jan-Mar, the bank's other income fell by 34% on the year to Rs 12,027 crore and expenses rose by over 4% to Rs 60,364 crore.

This has come as the bank had sold 14.01 crore equity shares of HDFC Credila Financial Services Ltd for a consideration of Rs 9,552 crore, which led to a one-time gain of Rs 7,341 crore. Consequently, HDFC Credila ceased to be a subsidiary of the bank from March 19, 2024.

However, lower provisions and an improvement in asset quality helped the private sector bank to report nearly a 7% year-on-year rise in net profit at Rs 17,616 crore. The bank's bottom line also surpassed analysts' expectations of Rs 16,908 crore polled by Bloomberg.

Provisions and contingencies at the bank plunged 76% year over year to Rs 3,193.05 crore.

Net interest income of the bank rose 10% on the year to Rs 32,066 crore.

Core net interest margin stood at 3.46% for the bank because of an income tax refund worth Rs 7,000 crore and 3.73% on an interest-earning asset basis. In the March quarter, the net interest margin was at 3.54% on total assets.

The private sector bank's asset quality improved, with the gross non-performing assets ratio at 1.33% as of March 31, compared to 1.42% in the previous quarter. The net NPA ratio fell to 0.43% from 0.46% in the prior quarter.

The bank's gross advances rose 5.4% on the year to Rs 26.43 lakh crore. Retail loans of the bank grew 9% on the year, and commercial and rural rose by nearly 13%. Corporate and other wholesale loans fell by 4%. Overseas advances contributed nearly 2% to overall advances.

Answering a query on corporate loans, Chief Financial Officer Srinivasan Vaidyanathan said in a post-earnings call that the bank has been degrowing its corporate loan book because pricing was not making sense.

However, the bank will continue to look at price and quality when extending corporate loans. Additionally, corporates have been taking a 'wait and watch mode' amid geopolitical headwinds due to uncertainty from the ongoing tariff situation.

On growing retail book, Vaidyanathan said that there is a lot of opportunity for this space in India due to low penetration.

On loan growth, he said that the bank's aim has been to increase loan growth at par with industry levels in 2026-27.

The bank's credit-to-deposit ratio is at 96.5% as compared to over 100% last year, Vaidyanathan said.

He said that the bank aims to achieve the CD ratio prior to Housing Development Finance Corp Limited and HDFC Bank merger level of around 85-90% by 2026-27 (Apr-Mar).