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HDFC Bank, India's largest private sector lender, reported a 5% year-on-year (YoY) increase in its net profit for the second quarter of the fiscal year 2023-24. The bank's profit after tax (PAT) reached Rs 16,821 crore during the July-September quarter, compared to Rs 16,018 crore in the corresponding period last year. This growth was driven by a robust performance across various segments, particularly in the bank's net interest income (NII).
The bank's NII, which represents the difference between interest earned on loans and interest paid on deposits, surged by a significant 19% YoY to Rs 25,846 crore in the second quarter. This growth was attributed to a combination of factors, including expansion in the loan book and a favorable interest rate environment. The bank's asset quality also remained healthy, with the gross non-performing asset (NPA) ratio declining to 1.17% as of September 30, 2023, from 1.23% in the previous quarter. This demonstrates the bank's resilience and ability to manage credit risk effectively.
Despite the positive performance, HDFC Bank's net profit growth was impacted by a rise in operating expenses. The bank's total operating expenses increased by 17% YoY to Rs 13,568 crore in the second quarter. This was primarily due to higher staff costs and marketing expenses. However, the bank's strong NII growth helped offset the impact of increased expenses, resulting in a respectable net profit growth rate. Moving forward, HDFC Bank is expected to continue its growth trajectory, benefiting from the robust economic environment and increasing demand for credit in the Indian market.