Key Takeaways From HDFC Bank's Q3 Results: Profit Increases 34% to Rs 16,373 Crore, Meeting Street Expectations.

In comparison to same quarter last year, when net interest income (NII) was Rs 22,990 crore, it increased 23.9% YoY to Rs 28,470 crore. NII is defined as interest earned less interest spent.

HDFC Bank Ltd. revealed on Tuesday that its standalone nel profit for the December quarter increased by 33.54 percent year over year (YoY) to Rs 16,372,54 crore from Rs 12,259.49 crore in the corresponding period of the previous year. The profit amount mostly matched predictions from the Street. The quarter's net net interest income (NII), which is calculated as interest earned less interest spent, increased 23.9% year over year to Rs 28,470 crore from Rs 22,990 crore during the same period the previous year. The NII increase was just lower than the 25% analyst growth projections. Pre-provision operating profit increased to around Rs 23,650 crore, a 24.3% increase. From Rs. 2.810 crore in the same period last year to almost Rs 4,220 crore this quarter, provisions increased. According to the private lender, its care net interest margin (NIM) was 3.4% based on total assets and 3.6% based on assets that generated interest.

Preview of HDFC Bank's Q3 results: 30% profit growth is anticipated; NIM recovery is probable: provisions may increase.

As of December 31, 2023, gross non-performing assets accounted for 1.26 percent of gross advances, down from 1.34 percent on September 30, 2023, and 1.23 percent on December 31, 2022. As of December 31, net non-performing assets accounted for 0.31 percent of net advances.

In comparison to the Rs 8500 crore in the similar quarter ended December 31, 2022, non-interest revenue for the quarter ended December 31, 2023 was around Rs 11,140 crore. Fees and commissions, one of the four components of other income, were Rs 6,940 crore billion as opposed to Rs 6,050 crore YoY.
Revenue from foreign exchange and derivatives was Rs 1210 crore as opposed to Rs 1,070 crore in the previous year; net trading and mark-to-market gain was Rs 1,470 crore as opposed to a gain of Rs 260 crore in the previous year. Dividends and other income, such as recoveries, totaled Rs 1,520 crore as opposed to Rs 1,110 crore.According to HDFC Bank, its operating costs increased by 28.1% to Rs 15,960 crore from Rs 12,460 crore in the same period the previous year. For the quarter, the cost-to-income ratio was 40.3%.
According to Basel II criteria, the Bank's total Capital Adequacy Ratio (CAR) was 18.4% as opposed to 19.4% year over year. This is in violation of the 11.7 percent regulation threshold.

In comparison to 7,183 branches and 19,007 ATMs spread over 3,552 cities and towns as of December 31, 2022, HDFC Bank's distribution network had 8,091 branches and 20,688 ATMs spread across 3,872 cities and towns as of December 31, 2023. Fifty-two percent of its branches were located in rural and semi-urban areas.
Furthermore, there are 15,053 business correspondents, the majority of whom work in Common Service Centres (CSC). In a BSE filing, the bank stated that as of December 31, 2023, there were 2,08,066 workers (compared to 1,66, 890 as of December 31, 2022).
The growth rate of domestic retail loans was 111.1%, while loans from commercial and rural banks increased by 31.4%. Corporate and other wholesale loans, which do not include HDFC Ltd's non-individual loans totaling roughly Rs 98,900 crore, climbed by 11.2%. 1.7% of total advancements came from outside sources.