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The Indian private banking sector experienced a robust quarter ending June 2024, driven by strong loan growth and a corresponding increase in profitability. Leading the pack was HDFC Bank, India's largest private lender, which reported a remarkable 35% surge in net profit to Rs 16,174 crore compared to the same period last year. While this figure was lower than the preceding quarter's Rs 16,511 crore, it still surpassed analysts' expectations.
This impressive performance can be attributed to the bank's strategic focus on expanding its loan portfolio. The merger of HDFC and HDFC Bank, effective from July 1, 2023, has undoubtedly played a significant role in driving this growth. The bank's board also approved the initial public offering (IPO) of its subsidiary, HDB Financial Services, a move necessitated by RBI's scale-based regulations that mandate finance companies to go public upon reaching a certain size.
Other private banks also reported substantial profit increases. Kotak Mahindra Bank witnessed an 81% jump in net profit, reaching Rs 6,250 crore, primarily due to a one-time gain of Rs 3,520 crore generated from the 70% sale of Kotak General Insurance to Swiss insurer Zurich Insurance. Excluding this one-time gain, the bank's profit would have only increased by 2%. Yes Bank saw a 46.7% rise in net profit, reaching Rs 502 crore, driven by a significant reduction in provisions to Rs 212 crore, a 41% drop compared to the previous year. This decline in provisions reflects the bank's proactive efforts to clean up its books by offloading bad loans to JC Flowers Asset Reconstruction Company.
RBL Bank also reported positive results, with net profit climbing 29% to Rs 372 crore for the quarter. These impressive figures demonstrate the overall health and resilience of the Indian private banking sector. The strong loan growth, combined with effective cost management and strategic initiatives, have positioned these banks for continued success in the coming quarters.
Source: Led by HDFC Bank, private lenders' net profit jumps on loan growth