HDFC Bank posted a 20 per cent year-on-year (YoY) increase in net profit for Q2FY23, aided by strong loan growth and improved asset quality.

The bank’s net profit for the quarter was at ₹10,606 crore against ₹8,834 crore in the year-ago period. Net profit in the reporting quarter was up 15 per cent sequentially.

The country’s largest private sector lender saw loan growth of 23 per cent in the reporting quarter, with total advances at ₹14.8 lakh crore. Including transfers through inter-bank participation certificates and bills rediscounted, advances were up 26 per cent.

Strong loan growth was led by a 21 per cent increase in domestic retail loans, 31 per cent rise in commercial and rural banking loans, and 27 per cent growth in corporate and other wholesale loans.

Net interest income for the quarter was higher by 19 per cent at ₹21,021 crore. The core net interest margin of the bank was at 4 per cent.

On a consolidated basis, which includes the results of HDFC Securities and HDB Financial Services, HDFC Bank’s net profit rose 22 per cent YoY to ₹11,125 crore. Consolidated advances grew by 23 per cent to ₹15.3 lakh crore.

Asset quality improves

HDFC Bank’s provisions for the quarter fell 17 per cent YoY to ₹3,240 crore, which included loan loss provisions of ₹3,000 crore. The credit cost ratio was at 0.9 per cent, lower than 1.3 per cent in the year-ago period.

Gross NPA ratio of the bank improved to 1.23 per cent as of September 30, from 1.28 per cent in the previous quarter and 1.35 per cent a year ago. Net NPA ratio, too, at 0.33 per cent, was better than 0.35 per cent a quarter ago and 0.40 per cent in the corresponding quarter of the previous year.

The lender also posted strong growth in deposits, which grew 19 per cent YoY to ₹16.7 lakh crore, led by a 15 per cent increase in low-cost current and saving account (CASA) deposits. At ₹5.3 lakh crore, CASA deposits comprised 45 per cent of total deposits at the end of September.

The bank’s capital adequacy ratio was 18 per cent as of September 30, as against the regulatory requirement of 11.7 per cent. Tier-I capital was at 17 per r cent, and the common equity tier-I (CET-1) capital ratio was at 16 per cent.