HDFC Bank logs 5% rise in profit on margin pressure

HDFC Bank, India's largest private sector lender, reported a 5% year-on-year rise in its June quarter net profit to ₹19,059 crore as margins contracted. The figure missed the average estimate of ₹19,720 crore in a Bloomberg survey of analysts. The bank had reported a profit of ₹18,155 crore in the same period last year. Net interest income grew 6.7% year-on-year to ₹33,530 crore from ₹31,440 crore in the same quarter last year. Net interest margin (NIM) stood at 3.26%, down from 3.4% in the year-ago period.

"Things remain reasonably healthy at a macro level and at the institution level, and we are at the cusp of having a different kind of energy over the next couple of years, and that is what we are all focusing on for the medium and long term," said MD and CEO Sashidhar Jagdishan. Regarding the pending matter of the managing director's appointment, the bank said the Group Nomination and Remuneration Committee and the board are seized of the matter and that the process is underway.

Jagdishan's Term to End in October | page 7


Once a decision is reached, the bank said it would inform stakeholders and the exchanges of the outcome. Jagdishan's current term is due to end in October and the bank is reviewing his potential reappointment for a third term.

Gross advances rose 15.4% to ₹30.60 lakh crore from ₹26.53 lakh crore in the same period last year. Within this, retail loans grew 7.2%, business banking loans rose 22.3%, and corporate loans increased 18.6%.

"The corporate and mid-market segments, along with other wholesale, have again grown at about 18.5-19%, which should give you a good sense of the growth we're seeing on the consumption side, spanning retail, mid-market, and corporate," said deputy managing director Kaizad Bharucha.

The gross non-performing asset ratio improved to 1.17% from 1.40% in the year-ago period. Fresh slippages stood at ₹3,580 crore, up from ₹3,410 crore in the March quarter. Deposits grew 13.3% to ₹30.11 lakh crore, from ₹26.57 lakh crore a year earlier.

"Margin pressures persisted as both loan yields and funding costs moved adversely, tempering NII growth despite robust loan and deposit accretion," said Pranav Gundlapalle, head of india financials at Bernstein. "Against this backdrop, the bank once again leaned on operating efficiency to protect profitability, while stable asset quality provided an additional cushion."