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HDFC Bank, India's largest private sector lender, announced strong second-quarter (Q2) results, reporting a consolidated profit after tax (PAT) of Rs 17,830 crore. This represents a 17.4% increase over the same period last year, adjusted for trading and mark-to-market gains and tax credits. The bank's consolidated revenue for the quarter ending September 30, 2024, grew by 14.7% year-on-year (YoY) to Rs 76,040 crore, highlighting a consistent growth trajectory in its core operations.
The bank's robust performance was driven by a strong net interest income (NII), which grew by 10% to Rs 30,110 crore for the quarter. This increase was attributed to the bank's effective management of its lending and deposit mix, resulting in an improved interest margin. The bank's core net interest margin (NIM) was 3.46% on total assets and 3.65% based on interest-earning assets, demonstrating efficient asset utilization and interest income generation.
Other income, which includes non-interest revenue, also contributed to the strong performance. Other income for the quarter stood at Rs 11,480 crore, compared to Rs 10,710 crore in the corresponding quarter of the previous year. This growth was likely driven by increased fee income from various banking services, highlighting the bank's ability to diversify its revenue streams.
Despite the positive performance, the bank's operating expenses increased by 9.7% to Rs 16,890 crore for the quarter, resulting in a cost-to-income ratio of 40.6%. While this indicates a healthy focus on controlling costs, the bank's operating expenses are still a key area to watch, as they can impact profitability in the long run.
The bank's asset quality remained relatively stable. Gross non-performing assets (GNPA) stood at 1.36%, slightly higher than the previous quarter's 1.33%. Net NPA also increased to 0.41% from 0.39%. However, the bank's provision for the quarter stood at Rs 2,700.5 crore, slightly higher than the previous quarter but lower than the corresponding quarter last year, suggesting a cautious approach to managing credit risk.
HDFC Bank's strong Q2 performance demonstrates its continued resilience and growth momentum despite the challenging macroeconomic environment. The bank's focus on lending growth, coupled with its commitment to efficient cost management and disciplined asset quality management, positions it well for future growth. However, it remains important to monitor the impact of rising interest rates and potential economic headwinds on the bank's profitability in the coming quarters.
Source: HDFC Bank Q2 results: Consolidated PAT rises to Rs 17,830 crore, revenue up 14.7% YoY