HDFC Bank on Wednesday announced a 2% year-on-year rise in net profits to Rs 16,736 crore for the December quarter, impacted by rise in bad loans and slowing growth in advances. The profits were in line with analyst estimates.
The private sector bank’s net interest margin remained steady at 3.43% in Q3 from 3.46% in the September quarter. The lender’s net interest income, the difference between interest earned and paid, rose 8% y-o-y to Rs 30,650 crore.
Shares of the bank closed 1.4% higher at Rs 1,665 apiece on the Bombay Stock Exchange, post the earnings announcement.
Srinivasan Vaidyanathan, chief financial officer, HDFC Bank said in a post earnings call the bank aims to grow deposits higher than advances. “Our endeavour will be to grow deposits faster than credit in FY26,” Vaidyanathan said.
Asset quality deteriorated as its gross non-performing assets ratio rose to 1.42% as of December end, compared to 1.36% in the September quarter. The net NPA ratio rose to 0.46% from 0.41%. Slippages for the quarter increased to Rs 8,800 crore in Q3 from Rs 7,800 crore in the September quarter.
The private lender witnessed a marginal growth in loans as its gross advances rose 3% on the year to Rs 25.43 lakh crore as of the quarter ending December. Retail loans grew 10% while the commercial and rural banking book rose by nearly 12%. Corporate and other wholesale loans declined by over 10%.
HDFC Bank has been attempting to shrink its retail loan portfolio to improve its credit-deposit ratio which rose after its merger with Housing Development Finance Corporation in 2023.
The private lender witnessed strong growth in deposits during the quarter. Total deposits surged 16% to Rs 25.64 lakh crore as of December end 2024. The current account and savings account (CASA) ratio of the bank declined to 34% from 38% the same quarter a year ago.
The management did not announce a clear timeline for the launch of IPO of HDB Financial Services. Vaidyanathan said the lender sould be in a position to take the next steps once it got the approval. “I cannot give one particular time because there are various regulatory approvals to be received,” he said.
HDB Financials filed its draft red herring prospectus with the Securities and Exchange Board of India in October to raise up to Rs 12,500 crore through an initial public offer.