Mumbai: HDFC Bank on April 20 reported a net profit of INR 16,511 crore for the January-March quarter of the financial year 2023-24, marking a 0.84% jump compared to INR 16,373 crore clocked in the previous quarter. The net profit is almost in line with the market estimates of INR 16,576 crore.

The bank’s year-on-year financial results are not comparable due to the merger with the parent entity HDFC Ltd during the year.

The net interest income (NII) of INR 29,007 crore jumped from INR 28,470 crore reported in the previous quarter. The NII is slightly lower as against the market estimates of INR 29,172 crore.

The bank's gross non-performing asset (NPA) stood at 1.24%, down from 1.26% in the last quarter. On the other hand, net NPA for the quarter stood at 0.33% compared to 0.31%.

Gross NPA amounted to INR 31,173.3 crore, while net NPA stood at INR 8,091.7 crore. The bank's net revenue surged to INR 47,240 crore, including transaction gains of INR 7,340 crore from the stake sale in subsidiary HDFC Credila Financial Services during the quarter.

HDFC Bank's core net interest income -the difference between interest earned and paid- grew to INR 29,080 crore for the reporting quarter, while the other income grew to INR 18,170 crore. The lender has reported its core net interest margin (NIM) of 3.44 per cent on total assets.

The net revenue of the lender grew to INR 47,240 crore including transaction gains of INR 7340 crore from the stake sale in subsidiary HDFC Credila Financial Services during the quarter.

The board of directors recommended a dividend of INR 19.5 per equity share of INR 1 for the year ended March 31, 2024, the bank said in a press release. Provisions and contingencies for the quarter were INR 13,500 crore which included floating provisions of INR 10,900 crore, the bank said.

Provisions and contingencies for the quarter were INR 13,500 crore which included floating provisions of INR 10,900 crore, the bank said. For FY24, the total profit of the private lender stood at INR 64,060 crore. On Friday, shares of HDFC Bank settled 2.46% higher at INR 1,531.30 apiece on the BSE.

HDFC Bank made higher provisions against potential bad loans, while its lending margins were stable. HDFC's higher borrowing costs and lower-yielding loan book weighed on the merged entity's margins. D-Street analysts had expected the lender to slow loan growth in favour of deposit growth until it restored key ratios to pre-merger levels.

For FY24, the total profit of the bank stood at INR 64,060 crore. Shares of HDFC Bank closed for trading on April 19 at INR 1531.30, 2.46% up on the BSE.

What Analysts Have to Say

Jefferies maintained a 'buy' rating on HDFC Bank and raised the target price to INR 1,880 per share, noting that deposit growth was strong at 17% in Q4FY24. The brokerage believes that loan growth lagged at 12% in the quarter ended March as the management has been working on margin expansion and moderating its loan-to-deposit ratio.

HDFC Bank's loan-to-deposit ratio fell to 104% in Q4FY24 from 110% in Q3FY24. Ideally, a loan-to-deposit ratio of 80-90% is considered healthy for a bank, as long as it can meet its liquidity requirements.

Motilal Oswal, too, shared a 'buy' rating for HDFC Bank with a target price of INR 1,950 per share, forecasting a 13.5%/18% compound annual growth rate (CAGR) in loans/deposits over FY24-26.

Analysts at Kotak Institutional Equities said that the bank is taking the right steps to slow down loan growth and shifting its focus to improving the NIM through better loan pricing and/or improving the liability mix. They maintained a 'buy' rating on the counter, with a target price of INR 1,750 per share.

Article Sources – HDFC Bank Press Release, ANI, MoenyControl