HDFC Bank, the country’s largest private lender and the first to declare its FY24 earnings, posted a net profit of ₹16,512 crore for Q4, higher by 37.1 per cent on year but less than 1 per cent up sequentially. The results for Q4 and FY24 include the impact of the merger of erstwhile HDFC with the bank effective July 2023.

Net revenue grew 47.3 per cent on year to ₹47,240 crore which included gains of ₹7,340 crore from the stake sale in subsidiary HDFC Credila Financial. As a result, the bank saw net trading and mark to market gains of ₹7,590 crore in Q4 against a loss of ₹40 crore in the year ago period. Total other income for the quarter was up 108 per cent yoy to ₹18,170 crore.

The cost-to-income ratio for the quarter was at 38 per cent. Excluding certain transaction gains and the ex-gratia provision, cost to income ratio for the quarter was at 41.3 per cent.

The bank also saw write back of provisions worth ₹3,817 crore due to regulatory clarifications, leading to a net tax write back of ₹749 crore. This combined with treasury gains and those from Credila stake sale allowed the bank to make additional provisions of ₹10,900 crore during the quarter “to enhance its floating provisions, which are not specific to any portfolio”. The provisions are a countercyclical buffer to make the balance sheet more resilient and boost its tier-II capital, it said. Total provisions and contingencies for the quarter were ₹13,512 crore.

In the earnings call, CFO Srinivasan Vaidyanathan said the credit environment remains benign and asset quality is improving, which provided an “opportune time” for the bank to beef up provisions, supported by the one-off gains.

However, a 33.5 per cent rise in operating expenses to ₹17,970 crore for the quarter, weighed on the bottomline. Expenses for Q4 included staff ex-gratia provision of ₹1,500 crore.

Loan, deposit growth

Gross advances rose 55.4 per cent yoy and 1.6 per cent qoq to ₹25.1-lakh crore. Domestic retail loans grew 108.9 per cent, commercial and rural banking loans by 24.6 per cent, and corporate and other wholesale loans (excluding non-individual loans of HDFC Ltd of approximately ₹80,700 crore) grew by 4.2 per cent. Overseas advances constituted 1.5 per cent of total advances.

Net interest income (NII) for the quarter rose 24.5 per cent to ₹29,080 crore. Core net interest margin (NIM) was at 3.4 per cent on total assets, and 3.6 per cent on interest-earning assets.

Vaidyanathan said that post margins, erstwhile HDFC’s margins have improved to 3-4 per cent from 2-3 per cent earlier. The 4 bps sequential improvement in NIM in Q4 has been supported by the shift in product mix and margins are expected to remain stable going ahead. The bank’s market share in the mortgage segment has increased by around 1 per cent in FY24, he added.

Deposits grew 26.4 per cent yoy and 7.5 per cent qoq to ₹23.8-lakh crore as of March 2024. CASA deposits grew 8.7 per cent with savings account deposits at ₹6-lakh crore and current account deposits at ₹3.1-lakh crore, comprising 38.2 per cent of total deposits. Time deposits were up 40.4 per cent at ₹14.7-lakh crore.

Accelerated deposit growth was supported by seasonal factors given heightened corporate flows during the last quarter of the financial year. “If there is CA flowing in from wholesale or retail, we will take it any time but that is seasonal,” Vaidyanathan said, adding that even so 84 per cent of the bank’s deposits continue to be retail and branch driven.

HDFC Bank’s gross NPA ratio improved to 1.24 per cent from 1.26 per cent in the previous quarter but was worse than 1.12 per cent a year ago. Net NPA ratio stood at 0.33 per cent of net advances as on March 31.

Slippage ratio for the quarter was 0.28 per cent and for FY24 was 1.1 per cent, lower than 1.5 per cent in FY23 with Vaidyanathan saying that slippages were boad-based. Credit cost ratio (excluding the floating provisions) was at 0.42 per cent compared with 0.67 per cent in the previous year.  

Basel-III compliant capital adequacy ratio (CAR) was at 18.8 per cent as on March 2024, lower than 19.3 per cent in the year ago period. Of this, tier-I capital at 16.8 per cent and Common Equity Tier-I (CET-1) capital was at 16.3 per cent. The bank declared a dividend of ₹19.5 per share for FY24