Q3 results: HDFC Bank posts Rs 16,373 crore profit for Sept-Dec 2023

Provisions Rs 1,200 cr against AIF exposure

HDFC Bank, India’s largest private-sector lender, on Tuesday reported a net profit of Rs 16,373 crore for the September-December 2023 period.

Its net interest income — the difference between interest earned and paid — stood at Rs 28,471 crore for the period. While its core net interest margin (NIM) on total assets stood at 3.4 per cent, its 

NIM on interest-earning assets was 3.6 per cent. 

Both NIMs were steady when compared with the July-September quarter.

The bank’s results for the quarter are not comparable on a year-on-year basis, as mortgage lender HDFC Ltd was merged with it on July 1, 2023.

Answering a question about guidance on margins, Chief Financial Officer Srinivasan Vaidyanathan said the bank believed the rate-hike cycle was over and, in such times, customers would lock in their funds at higher rates before the cycle turns. 

Other income during the period was Rs 11,140 crore, against Rs 10,780 crore during the previous quarter.

HDFC Bank has made a contingent provision of Rs 1,219.76 crore in respect of investments in alternative investment funds (AIFs), following the Reserve Bank of India (RBI) circular in December. 

“On AIF, our book was Rs 1,200 crore... the fair value is Rs 500 crore more than that. However, the current applicable RBI circular asks to make a provision by January 18. On a prudent basis, we have created a contingent provision for the 100 per cent of the AIF value which is on our books,” Vaidyanathan said in the post-earnings media call.
 

 As a result, the total provision during the quarter went up to Rs 4216 crore, compared with Rs 2,903.83 crore during the previous quarter.

 Vaidyanathan said the recent RBI norms on increasing risk weightings on unsecured loans and loans to non-banking financial companies (NBFCs) would have an impact of 97 basis points on capital. The bank’s capital adequacy ratio (CAR), according to Basel-III guidelines, was 18.4 per cent as on December 31.

 HDFC Bank’s gross advances during the December quarter increased to Rs 24.69 trillion, up by Rs 1.1 trillion or 4.9 per cent sequentially. Retail loans grew 3.3 per cent quarter-on-quarter, while mortgage loan disbursement stood at Rs 46,000 crore.

 While total deposits as on December 31 were Rs 22.14 trillion, retail deposits grew by Rs 53,000 crore during the quarter. The bank reduced bulk deposits by Rs 11,800 crore in Q3.

 The share of low-cost deposits — the current and savings account deposits — inched up marginally to 37.7 per cent of total deposits.

 HDFC Bank added 908 branches in the past 12 months, and 146 in the December quarter, taking the total to 8,091. Fifty-two per cent of the branches are in semi-urban and rural areas. 
 

Vaidyanathan said the bank would continue to expand its footprint as the plan was to have around 13,000 branches over the next few years.