The HDFC Bank logo.
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New Delhi: HDFC Bank on Saturday reported a 6 per cent increase in September quarter net profit to Rs 17,825.91 crore on a consolidated basis.
On a standalone basis, the largest private sector lender's post-tax net grew to Rs 16,820.97 crore during the reporting period, as against Rs 15,976.11 crore in the year-ago period.
Its core net interest income grew 10 per cent to Rs 30,010 crore on the back of a 7 per cent increase in gross advances and the margins being stable at 3.46 per cent.
The bank, which had guided towards doubling in size in four years recently, is operating as per market dynamics right now, its Chief Financial Officer S Vaidyanathan told reporters here on a call.
Pointing to the 15 per cent deposit growth, he said it is focusing on the liabilities and keeping the credit growth just at par or lower than the market, and will grow faster than the industry next year and get back to growing at the legacy growth rates the year after, he said.
On the advances growth front, the large ticket wholesale advances degrew 2.8 per cent during the quarter, and Vaidyanathan blamed it on pricing issues.
He said the rates being demanded by corporate borrowers are too low from the bank's risk perspective, and added that only half of the 2.50 per cent in rate hikes seem to be transmitting into the loan market for corporate borrowers.
There is not much demand from the corporates on the private capex front, he said, adding that this might be the result of companies opting to operate at higher capacity utilisation levels in the absence of a certainty on the demand for the goods they produce.
The bank's credit deposit ratio was at 99.8, the first time that the number has fallen below the 100 per cent mark since the merger of mortgage major parent HDFC into itself in July 2023. Without giving a timeline or a desired level, Vaidyanathan said it would like to bring down the level further.
It sold a further Rs 19,000 crore of loans through the securitisation route adopted to bring down the CD ratio during the quarter, taking the overall levels of such transaction to Rs 24,000 crore since it did the first issuance earlier this year.
The CFO said this is a "modest" beginning of a long-term strategy, and hinted towards more such deals happening over the next five years.
It will take another 2-3 years to get the CD ratio back to the pre-merger levels of 86-87 per cent, he said.
The bank is desirous of funding its loans through deposits and wants to reduce the reliance on market borrowings, he said, adding that the level of market borrowings has now come down to 16 per cent from 20 per cent during the time of the merger.
The bank will depend on its network of 9,092 branches -- it added 241 during the quarter -- to grow its liabilities, he added.
On the asset quality front, the gross non-performing assets ratio remained almost stable at 1.36 per cent, and the CFO said unlike peers, the lender is not experiencing any elevated stress on the unsecured advances front.
He said the bank had adopted a strategy of slowing down on unsecured advances much before the regulatory flags on the segment came in, and pointed to data.
The bank grew unsecured advances at 19 per cent in FY23 as against 28 per cent for the system, and brought it down further to 10 per cent when the system grew at 21 per cent, he said.
Without giving a number on the stress in unsecured loans, the CFO said retail loans, which grew at over 11 per cent during the quarter, had a GNPA of 0.8 per cent, and added that the unsecured portfolio is stable and performing well.
On the fate of the HDB Financial Services' IPO following the release of draft norms on banks' ownership of entities, he did not reply specifically but said the Reserve Bank of India rules on upper-tier NBFCs needing to list give time till September 2025 for the listing, and added that the bank has initiated a process on the same.
Stating that the bank will be writing to the regulator with its concerns, he made it clear that there is no regulatory arbitrage between HDB Financial and the bank.
The bank's capital adequacy stood at 19.8 per cent as on September 30 with the core tier-I at 17.8 per cent.
It added nearly 9,000 employees during the year and the overall strength stood at 2,06,758 as of September 30, 2024.
Among the subsidiaries, HDB Financial reported a marginal dip in its September quarter profit at Rs 590 crore, while that of the life insurance arm increased to Rs 430 crore from Rs 380 crore.
The bank's general insurance arm saw its net profit declining to Rs 200 crore from Rs 240 crore while the asset management company's profit after tax jumped to Rs 580 crore in the September quarter from Rs 440 crore in the year-ago period.