HDFC Bank's Q4FY25 results: Net profit up 6.7% aided by lower provisions

The bank's NII was up a little over 10 per cent Y-o-Y at Rs 32,065.8 crore in the reporting quarter

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HDFC Bank, country’s largest private sector lender, reported a 6.7 per cent year–on–year (Y-o-Y) jump in standalone net profit at Rs 17,616 crore in the January–March quarter of the financial year 2024-25 (Q4FY25), aided by healthy growth in net interest income (NII) and lower provisions. 

 

On a sequential basis, net profit was up 5.3 per cent Y-o-Y.

 

The bank’s NII was up a little over 10 per cent Y-o-Y to Rs 32,065.8 crore in the reporting quarter, despite advances growing in low teens. Other income of the bank stood at Rs 12,003 crore.

 

The bank reported a net interest margin (NIM) of 3.54 per cent on total assets, and 3.73 per cent on earning assets. NIM is the measure of profitability of banks.

 

Interestingly, its operating profit was down 9.4 per cent Y-o-Y to Rs 26,537 crore in Q4FY25, compared to Rs 29,274 crore in the corresponding period last year (Q4FY24).

 

Provisions and contingencies dropped 76 per cent Y-o-Y to Rs 3,193 crore in Q4FY25.

 

The lender reported improvement in asset quality as gross non-performing assets (NPAs) ratio at the end of Q4FY25 dropped 9 basis points over Q3FY25 to 1.33 per cent. Net NPAs stood at 0.43 per cent.

 

Its gross advances portfolio grew 5.4 per cent Y-o-Y to Rs 26.43 trillion, with retail loans growing 9 per cent Y-o-Y, commercial and rural banking loans growing 12.8 per cent Y-o-Y, and corporate and wholesale loans growing 3.6 per cent Y-o-Y.

 

The lender’s deposit base grew 14.1 per cent Y-o-Y to Rs 27.14 trillion at the end of Q4FY25. Current account and savings account (CASA) deposits grew 3.9 per cent Y-o-Y, while time deposits grew 20.3 per cent Y-o-Y, resulting in CASA deposits comprising 34.8 per cent of total deposits as of March 31, 2025.

 

HDFC Bank has recommended a dividend of Rs 22 per share of face value of Rs 1 each for FY25 . The record date for the dividend is June 27. 

“India is well placed as the Reserve Bank of India (RBI) has recently commenced lowering policy rates. Moderation in food inflation and headline inflation also augurs well”, said Srinivasan Vaidyanathan, CFO, HDFC Bank in a post earnings media call, adding that there already have been two rate cuts by RBI and the stance has been changed from neutral to accommodative, which is a welcome relief for the banking system that was in need of liquidity. “RBI’s intent to increase durable liquidity has been followed by concrete actions, which along with rate cut, will help in supporting GDP growth”, he said.

 

Vaidyanathan highlighted that the banks’ credit – deposit (CD) ratio, which was as high as 110 per cent during its merger with HDFC Ltd., has come down to 96.5 per cent at the end of Q4FY25.

 

He said the bank's endeavour is to bring it down to the pre – merger levels (86 – 90 per cent) by FY27, which is when the bank would look to outpace the industry growth in advances.

 

“Our endeavour is to get to where we were pre-merger (85-90 per cent) by FY27. We slowed our loan growth in FY25 to bring down our CD ratio. The bank, in FY26, will now grow its loan book at a rate the industry will grow and in FY27, we will have premium growth and will gain market share. In FY27, we will see CD ratio of pre-merger levels”, Vaidyanathan.