HDFC Bank Q1 Results 2022: Net Profit Rises 19%; Missed Estimates

HDFC Bank Q1 Results 2022
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HDFC Bank Q1 2022 Net Profit below expectations: The Net profit grew 19% year-on-year to Rs 9,195.99 crore, below analysts’ expectations. Analysts had earlier anticipated a net profit of about Rs 9,800 crore. Last year, during the same period, the bank reported a net profit of Rs 7,729.64 crore. Sequentially, the profit decreased by 8.5%. The bank was able to post a higher profit year-on-year on the back of healthy growth in net interest income and a decline in loan loss provisions.

HDFC Q1FY23 Net interest income beat estimates: 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 how much a bank is earning from its core operations. Net interest income for HDFC Bank grew 14.5% YoY to Rs 19,481.4 crore. However, analysts had estimated a Net Interest Income of Rs 19,203 crore. Sequentially, the NII increased from Rs 18,872.7 crore.

HDFC Bank Q1 2022 Results Net Interest Margin: The bank’s Core Net Interest Margin was 4% of total assets and 4.2% based on interest-earning assets. The bank continues to add new liability relationships at a robust pace of 2.6 million during the quarter. 

HDFC Bank Q1 FY23 Other Income: The non-interest income increased from Rs 6.288.6 crore to Rs 9,011.6 crore year on year. Sequentially, the Other Income increased from Rs 7,637.1 crore. The fees & commissions grew to Rs 5,360.4 crore (against Rs 3,885.4 crore last year), while the foreign exchange & derivatives revenue was up at Rs 1,259.3 crore (against Rs 1,198.7 crore in year-ago period). However, it reported a loss on sale/revaluation of investments of Rs 1,311.7 crore against a Rs 601 crore gain in the year-ago period. The miscellaneous income, including recoveries and dividends, rose to Rs 1,080.2 crore from Rs 603.5 crore.

HDFC Q1 2022 Results Asset Quality Improves: The bank’s asset quality improved with the gross NPA ratio reducing to 1.28% of total advances as against 1.47% in the year-ago period. Sequentially, gross NPA fell by 9 basis points. Net NPA was at 0.35% of net advances for the quarter ended June 30, a decline of 3 basis points, sequentially. Total provisions were 170% of the gross NPAs as of June 30, 2022.

HDFC Bank Q1 2022 Provisions: The provisions and contingencies for the Apr-Jun quarter reduced to Rs 3,187.7 crore from Rs 4,830.8 crore in the year-ago period. Sequentially, the provisions and contingencies have decreased from Rs 3,312.4 crores. The floating provisions were Rs 1,451 crore and contingent provisions at Rs 9,630 crore as of June 30, 2022.

HDFC Q1 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 20.1% year on year, with saving deposits at Rs 5.14 lakh crore and current account deposits at Rs 2.20 lakh crore in Q1FY23. The CASA deposits constitute 45.8% of the bank's total deposits. 

Total advances grew 21.6% year on year to 13.95 lakh crore. The retail loans grew by 21.7%, commercial and rural banking loans grew by 28.9%, and corporate and other wholesale loans grew by 15.7%. Overseas advances constituted 3.5% of total advances.

HDFC Q1 23 Capital Adequacy Ratio: The capital adequacy ratio (CAR) is a measurement of a bank's available capital expressed as a percentage of a bank's risk-weighted credit exposures. The Bank's CAR as per Base III guidelines was at 18.1% in Q1FY23 (19.1% in the year-ago period), as against a regulatory requirement of 11.7%.

HDFC Bank Q1 2022 Branches & Employees added: THe bank has added 725 branches and 29,038 employees over the last 12 months. In Q1FY23, it added 36 branches and 10,932 employees.

HDFC Bank Q1 earnings: 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 fell to Rs 432.5 crore from Rs 455.6 crore in Q1FY22. Profit After Tax fell to Rs 189.3 crore from Rs 251.1 crore in the year-ago period.

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 June, Bank holds a 95% stake in the company. The loan increased to Rs 61,326 crore in the March quarter. The net revenue was up by 13% YoY to Rs 1,941.1 crore and profit after tax was Rs 441.3 crore from Rs 88.6 crore in the year-ago period.

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