HDFC Bank Q1 PAT up 30%, bank to focus on growing time deposits
HDFC Bank It reported a net profit of INR 11,952 crore for the first quarter of FY24, up by 30 percent year-on-year, driven by strong growth in revenue and income and stable asset quality.
Net Interest Income (NII) for the quarter was 21% higher at INR 23,599 crore. The underlying net interest margin was 4.1% and, on an interest basis, the asset gain was 4.3%, both constant back-to-back with the prior quarter. In the same period last year, NIM net underlying was 4.0 percent and based on interest earnings assets it was 4.2 percent.
Total advances increased by 16 per cent to ₹16.2 crore as of June 30 led by 20 per cent growth in domestic retail loans, 29 per cent in commercial and rural bank loans and 11.2 per cent in corporate and other wholesale loans.
after earnings
On a post-earnings call, CFO Srinivasan Vaidyanathan said the wholesale book was down 1-2 percent sequentially, mainly due to pricing turmoil over the past few quarters due to the bank not acting aggressive and instead waiting for the right lending opportunities.
HDFC Bank deposits grew by 19 per cent year-on-year to ₹19.1 lakh crore as of June 30, with low-cost CASA deposits up by 10.7 per cent.
Vaidyanathan said while the first quarter is usually slow for deposit build-ups, the bank was able to maintain and build on the “tremendous growth” seen in the March quarter, reflecting that the “fundamental building blocks of the bank are sound”.
The share of deposits in checking and savings accounts fell to 42 percent from 44 percent in the previous quarter and 46 percent a year ago. The bank’s term deposits were at ₹11.0 lakh crores at the end of June, up 26 per cent on an annual basis.
Vaidyanathan said the CASA ratio has touched a peak of 47 per cent during Covid and has returned to the long-term rate of 39 per cent.
“That’s a strategy that we’ve been working on for the last 15 months or so, and it’s the time deposit strategy. Very low spread, only about 14 percent of our customer base. Because the customer base is large, it’s now moved to 14.5 percent,” he said, adding that term deposits It increased by 29 percent in fiscal ’23.
CRM
He added that most of these customers are current customers in savings accounts, and the bank is looking forward to developing this book as it expands its relationships with customers through commitments and other products such as cards and wealth management.
The bank’s total NPA was 1.17 percent at the end of June, slightly worse than the 1.12 percent in the previous quarter but better than the 1.28 percent a year ago. The net NPA rate of 0.30 percent was unchanged from the previous quarter and marginally better than the 0.40 percent a year ago.
The bulk of the pressure continued in the agricultural sector, with the bank saying that excluding agricultural loans, the total NPA rate would have been 0.94 percent in June 2023 and 1.06 percent in June 2022.