(Bloomberg) — HDFC Bank, India’s largest private lender, posted second-quarter profits that beat analysts’ expectations, helped by strong growth in deposits and loans.
Net profit for the three months ended September 30 rose 5.3% from a year earlier to 168.2 billion rupees ($2 billion), the company said in a statement on Saturday. This compared to the average estimate of Rs 162.84 billion by analysts surveyed by Bloomberg.
The September quarter will be the first time that HDFC’s numbers will be on par with the same period last year since its merger with Housing Development Finance Corporation was completed in July last year.
The Reserve Bank of India has expressed concern over the rise in the credit deposit ratio, a measure of how much of a bank’s deposits are lent out. Bank deposit growth continues to lag behind strong domestic credit expansion, leading to an increase in credit deposit ratios for most banks. Regulators have also cracked down on unsecured loans, which have grown almost twice as fast as overall credit, and last November asked banks to increase buffers on some consumer loans.
HDFC has been selling part of its retail loan portfolio to improve its credit-to-deposit ratio, which soared after its merger with Housing Development Finance last year. According to a report from rating agency ICRA, an affiliate of Moody’s, the bank’s CD ratio was 104% as of March 31, after reaching 107% after the merger, but is still 85% to 88% before the merger. % level. .
HDFC has decided to slow down the growth in its loan book, repay HDFC borrowings on maturity and explore early repayment opportunities while pursuing more profitable sources of financing, CEO Sasidar said.・Jagdishan stated in the bank’s latest annual report.
Jagdishan said in a conference call with analysts in July that the bank had made a “conscious decision” to build up its unsecured loan balance slowly. “We’ll put the pedal to the metal at the right time,” he said at the time.
HDFC’s deposits rose 15.1% year-on-year to Rs 25 trillion in the September quarter, significantly higher than the industry’s growth rate of around 11.5% as of October 11, based on Reserve Bank of India data.
Bank loans rose 7% to Rs 25.19 trillion as on September 30 due to a decline in corporate loans and a modest increase in personal loans during the quarter. Net interest margin fell to 3.46%, lower than analysts’ expectations of 3.48%.
Rival Axis Bank on Thursday said its second-quarter net profit rose 18%, beating analysts’ expectations and adding to Friday’s share price rise, the biggest in four months.
–With assistance from Rakesh Sharma.
©2024 Bloomberg LP
