HDFC Bank, India’s largest private sector bank, on Saturday reported healthy growth in its standalone Q4FY23 net profit at Rs 12,047.5 crore, up 20% on a year-on-year (YoY) basis. This was primarily on the back of healthy growth in net interest income (NII) and lower provisions. However, it missed Bloomberg estimates of net profit at Rs 12,137 crore (18 analysts).

HDFC Bank has recommended a dividend of 1,900%, aggregating to Rs 19 per share, the highest ever since listing.

On a consolidated basis, the lender’s bottomline rose 21% YoY to Rs 12,594.5 crore, as per an exchange filing. For the full year, the standalone net profit stood at Rs 44,108.7 crore (up 19.3%) and the consolidated net profit was at Rs 45,997.1 crore.

The bank’s numbers were boosted by moderation in gross non-performing asset (GNPA) ratio to 1.1% from 1.2% a year ago, while net NPA was flat at 0.3% at March-end.

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For the quarter ended March, the bank’s net interest income (NII) grew by 24% on year to Rs 23,351.8 crore. Core net interest margin (NIM), a key indicator of lenders’ profitability, was at 4.1% during Q4FY23, flat on a sequential basis and higher by 100 basis points on year.

The bank’s other income for Q4FY23 was at Rs 8,731.2 crore, as against Rs 7,637.1 crore in the corresponding quarter previous fiscal. Of the total other income, fees and commissions accounted for Rs 6,628.1 crore, foreign exchange and derivative revenue were at Rs 1,010.5 crore and miscellaneous income, including recoveries and dividends, generated Rs 1,130.2 crore.

The bank, however, made a net trading and mark-to-market loss of Rs 37.7 crore in Q4FY23 as against a net gain of Rs 47.6 crore in Q4FY22.

HDFC Bank’s total advances grew 17% YoY to Rs 16 trillion as on March 31. Retail loans accounted for 47% of the lender’s total advances and wholesale loans formed the rest. “Domestic retail loans grew by 20.8%, commercial and rural banking loans grew by 29.8% and corporate and other wholesale loans grew by 12.6%. Overseas advances constituted 2.6% of total advances,” the bank said in a release.

The lender’s total deposits grew faster than loans, as it continued its aggressive deposit mobilisation strategy ahead of its merger with parent HDFC.

The bank’s total deposits grew 21% YoY to Rs 18.8 trillion as on March-end, while the low-cost current account and savings account ratio was down to 44.4% during Q4FY23 as against 48% in Q4FY22.

In the post-earnings analysts call, HDFC Bank chief financial officer (CFO) Srinivasan Vaidyanathan said the bank added over 600 branches during the reporting quarter, taking the total branch addition in FY23 to 1,479 branches, and overall branch network of 7,821 as on March-end.

“The new branches are for the future, I do not want to say that new branches are bringing in today’s deposits, but it is to have sustainability in growth over a period of time…,” he said. He added that the bank will need to leverage the branch network and the brand to bring in new customers. In 2022, it had got 8.5 million and in 2023 it added 10.5 million customers.

When asked about the cost of funds trajectory for this fiscal, Vaidyanathan said with the current deposit mix, the cost of funds will start inching up as the 30% growth in term deposit in recent quarters starts to fully come in. “So the cost of deposit will go up only because of the mix of deposits, not because of the rates. Similarly, the yield on assets also needs to go up,” he added.

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Further, the credit-cost ratio was at 0.67% during Q4FY23, as compared to 0.96% previous fiscal.

As asset quality improved, provisions and contingencies also fell to Rs 2,685.4 crore in Q4FY23 from Rs 3,312.4 crore in Q4FY22. Lastly, its capital adequacy ratio was at 19.3% as on March 31, of which tier-I capital stood at 17.1%.