HDFC Bank posted a net profit of ₹11,952 crore for Q1 FY24, 30 per cent higher on year, led by strong revenue and income growth and stable asset quality.

Net interest income (NII) for the quarter was 21 per cent higher at ₹23,599 crore. Core net interest margin (NIM) was 4.1 per cent and based on interest, earning assets was 4.3 per cent, both flat sequentially. In the year ago period, core NIM was 4.0 per cent and based on interest earnings asset was 4.2 per cent.

Total advances rose 16 per cent to ₹16.2-lakh crore as of June 30 led by 20 per cent growth in domestic retail loans, 29 per cent in commercial and rural banking loans, and 11.2 per cent in corporate and other wholesale loans.

Post earnings

In the post earnings call, CFO Srinivasan Vaidyanathan said that the wholesale book de-grew by 1-2 per cent sequentially primarily due to pricing disruptions over the last few quarters owing to which the bank is not being aggressive and is instead waiting for the right opportunities to lend.

HDFC Bank’s deposits grew 19 per cent y-o-y to ₹19.1 lakh crore as of June 30, wherein low-cost CASA deposits were up 10.7 per cent.

Vaidyanathan said while Q1 is typically a slow quarter for deposit accretion, the bank managed to keep the “phenomenal growth” seen in the March quarter and built further on that, reflecting that the bank’s “building blocks are intact”.

The share of CASA deposits fell to 42 per cent from both 44 per cent a quarter ago and 46 per cent a year ago. Time deposits of the bank were at ₹11.0-lakh crore at the end of June, up 26 per cent y-o-y.

Vaidyanathan said the CASA ratio had touched a peak of 47 per cent during Covid and has been normalising to the long-term average of 39 per cent.

“This is a strategy that we have worked on for the last 15 months or so, which is the time deposits strategy. The penetration is very low, only about 14 per cent of our customer base. Because the customer base is large, it has now moved to 14.5 per cent,” he said, adding that time deposits rose by 29 per cent in FY23.

Customer relationships

Bulk of these customers are existing saving account customers and the bank is looking to grow this book as it expands its customer relationships across liabilities and other products such as cards and wealth management, he added.

Gross NPA ratio of the bank was at 1.17 per cent at the end of June, slightly worse than 1.12 per cent a quarter ago but better than 1.28 per cent a year ago. The net NPA ratio at 0.30 per cent was unchanged from the previous quarter and marginally better than 0.40 per cent a year ago.

Bulk of the stress continued to be in the agricultural segment, with the bank saying that excluding agri loans the gross NPA ratio would have been 0.94 per cent in June 2023 and 1.06 per cent in June 2022.