Aided by a massive one-time gain of Rs 9,128 crore from the stake sale of its subsidiary HDB Financial Services, HDFC Bank reported a 12% rise in net profit at Rs 18,155 crore, from Rs 16,175 crore in the year-ago period, for the first quarter ended June.
The gain from offer-for-sale pushed up other income to Rs 21,730 crore in the quarter from Rs 10,668 crore in the year-ago quarter. For the first time the board also announced a bonus in the ratio of 1:1 along with an interim dividend of Rs 5 per share.
On June 25, HDB Financial Services had launched its IPO, where the bank sold shares worth Rs 10,000 crore via offer for sale. The bank’s shareholding reduced to 74.19% as on June 30 from 94.32% on March 31.
The net profit beat Bloomberg estimates of Rs 17,618 crore. Sequentially, the net profit for the bank rose 3.1%.
NII growth
The net interest income of the bank grew 5.4% to Rs 31,440 crore. The core net interest margin, a key indication of banks profitability, contracted to 3.35% from 3.46% in Q4FY25 reflecting faster repricing of deposits compared to assets after the policy rate cut.
Asset quality weakens
Meanwhile, the asset quality of the bank deteriorated during the quarter, increasing the provision requirements. The gross non-performing asset ratio rose to 1.40% from 1.33% a quarter ago and the net non-performing asset ratio was 0.47% compared to 0.43% as on March 31. The bank said slippages are majorly from agriculture segment due to seasonality. For Q1, the bank made provisions and contingencies of RS 14,442 crore, which included floating provisions of Rs 9,000 crore and an additional contingent provisions of Rs 1,700 crore, compared to Rs 2,602 crore in the corresponding period of the previous year. “The bank’s credit performance across all segments continues to remain steady, in a credit environment that remains benign. The bank has considered this as an opportune stage to enhance its floating provisions, which are not specific to any portfolio, nor meant for any specific anticipated risks, but act as a countercyclical buffer for making the balance sheet more resilient,” the bank said.
The average deposits rose 16.4% to Rs 26.6 lakh crore and sequentially, it grew 5.1%. Within deposits, CASA deposits constituted 34% as of June 30. On the other hand, gross advances were Rs 26.5 lakh crore, an increase of 6.7% in the reporting quarter.
“We do expect that our deposit growth momentum to continue, and we should continue to gain the market share that we have historically gained…On credit growth front, we will grow loans at the industry growth in FY26,” the bank said in a post-earnings call.
The bank’s credit-deposit ratio improved to 95% in the June quarter. “We do not have a target for a credit deposit ratio. We have earlier stated that we would like to operate between 85-90% over the medium-term. Prior to the merger, we were operating closer to 87-88%,” the bank said. The bank maintains a strong capital adequacy ratio at 19.88%, slightly improved from 19.33% a year ago.
