India’s HDFC Bank beats profit estimates on strong loan growth

MUMBAI: India’s HDFC Bank reported a stronger-than-expected increase in fourth-quarter profit on Saturday, on a pick-up in lending to consumers but lending margins remained weak.

The bank, which is reporting its first set of quarterly earnings since its chairman resigned citing differences over “values and ethics”, did not comment on the ongoing independent legal evaluation of the concerns raised in its press release.

The country’s largest private lender posted a standalone net profit of 192.2 billion Indian rupees ($2.08 billion) for the quarter ended March 31, compared with 176.16 billion rupees a year earlier and marginally above analysts’ estimates of 191.16 billion rupees, according to data compiled by LSEG.

Loan demand in India gained momentum in the second half of the fiscal year that ended in March as easing inflation and lower taxes supported household spending and corporate borrowing.

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HDFC Bank’s advances rose 12% from a year earlier at the end of the quarter, driven primarily by retail loans that include mortgages and personal debt. Total deposits rose 14.4%.

The lender’s net interest income – the gap between interest earned on loans and interest paid on deposits, a key measure of profitability – rose 3.2% to 330.8 billion rupees.

The net interest margin was stable at 3.38% but remained below the 4% level seen before the bank merged with its parent HDFC Ltd in 2023.

Analysts have watched for an improvement in margins as an indicator of success of the $40 billion merger.

Gross non-performing loans as a share of total loans eased to 1.15% at end-March from 1.24% in the previous quarter.

Income from treasury operations fell 13.6% on-quarter to 19.25 billion rupees as rising bond yields and the Indian central bank’s curbs on forex options hurt banks.