HDFC Bank Q3 results: Strong growth in profit, revenues; meets estimates

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Profit meets expectations: The Net profit grew 18% year-on-year to Rs 10,342 crore meeting street expectations. Analysts had earlier anticipated a net profit of about Rs 10,136 crore. Last year, during the same period, the bank reported a net profit of Rs 8,758 crore. Sequentially, the profit increased by 17.1%. The bank was able to post a higher profit on the back of strong loan growth and a healthy rise in Net Interest Income.

Net interest income rises: A bank’s primary business is to borrow money and lend the same at a rate higher than the rate at which they borrowed. The income generated from this differential is known as net interest income. This is an extremely important number to truly find out as to how much a bank is earning from its core operations. Net interest income for HDFC Bank grew 13% YoY to Rs 18,443 crore. Last year for the quarter ending December, the net income was Rs 16,317.6 crore.

HDFC Bank Q3 results: Highlights

 

Other Income: The non-interest income showed a strong pace of growth at 9.9% to Rs 8,183.6 crore over Rs 7,443.2 crore in the same quarter last year. The fees & commissions grew to Rs 5,075.1 crore, while the foreign exchange & derivatives revenue was up at Rs 949.5 crore. However, its gains on sale/revaluation of investments fell marginally to Rs 1,046.5 crore from Rs 1,109 crore a year ago. The miscellaneous income, including recoveries and dividend, rose to Rs 1,112.5 crore from Rs 797 crore.

Asset quality improves: The bank’s asset quality improved with the gross NPA ratio reducing to 1.26% of total advances as against 1.35% in the last quarter. Net NPA was at 0.37% of net advances for the quarter ended December 21, a decline of 3 basis points, sequentially.

Provisions: The provisions and contingencies for the Oct-Dec quarter reduced to Rs 2,994 crore compared to Rs 3,414.1 crore in the same period a year ago. Sequentially, the provisions and contingencies have come down significantly from Rs 3,924 crore. Total provisions for the quarter included Rs 900 crore worth of contingent provisions. 

Deposits and Advances: CASA capital is the cheapest source of capital for banks. The higher the number, the more profit a bank can earn. The CASA (Current and Saving Account) deposit grew by 24.6% on-year with saving deposits at Rs 4.71 lakh crore and current account deposits at Rs 2.10 lakh crore in Oct-Dec 21 quarter. The CASA deposits constitute 47.1% of the bank's total deposits. 

Total advances grew 16.5% YoY to 12.60 lakh crore. The retail loans grew by 13.3%, commercial and rural banking loans grew by 29.4%, and corporate and other wholesale loans grew by 7.5%.

HDFC Bank results: subsidiaries Updates

  • HDFC Securities Limited (HSL): It is the leading retail broking firm in India. HDFC Bank holds a 96% stake in HSL. HSL's total income grew 58% to Rs 535.6 crore. Profit After Tax grew 58% YoY to Rs 258 crore.
  • HDB Financial Services Limited: It is a non-deposit taking non-banking finance company offering a wide range of loans and asset finance products. For the quarter ended December, Bank holds a 95% stake in the company. The loan increased to Rs 60,478 crore in the December quarter compared to Rs 60,068 crore in the same period last year. The net revenue was up by 15% YoY to Rs 1981.6 crore.

HDFC Bank Q3 Review

HDFC Bank has reported a strong set of numbers for the quarter ended December with topline and bottom line meeting estimates. The healthy growth in Deposits and Advances has resulted in strong overall growth. The asset quality of the bank has also seen an improvement. The Capital Adequacy Ratio (CAR) was at 19.5% as of December 31, 2021, much above a regulatory requirement of 11.07%. Shares of HDFC Bank on Friday closed 1.03% higher at Rs 1543.80 on BSE.

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