HDFC Bank posts Rs 17,257 crore profit for Q4; sets aside Rs 10,900 crore floating provisions

HDFC Bank on Saturday reported a Rs 17,257.87 crore net profit for January-March on a consolidated basis, over 2 per cent higher than that in the preceding quarter.

Its consolidated net profit for FY24 came at 64,060 crore. On a standalone basis, the country's largest private sector lender reported a net profit of Rs 16,511.85 crore in the January-March quarter as against Rs 16,372.54 crore in the October-December quarter.

In July 2023, the bank merged its home loan-focused parent HDFC into itself.

The city-headquartered bank set aside over Rs 10,900 crore in floating provisions towards any setbacks in the future, courtesy Rs 7,340 crore gain on the sale of education loans focused Credila to private equity majors.

HDFC Bank chief financial officer Srinivasan Vaidyanathan told reporters that floating provisions are created during benign times like the current phase, and stressed that it is not done in anticipation of any event.

The bank, which is among the first lenders to announce the numbers for the quarter, reported that the core net interest income grew to Rs 29,080 crore for the reporting quarter, while the other income grew to Rs 18,170 crore.

On the net interest margin (NIM), wherein it had to face investors' concerns earlier, it reported a 0.04 per cent improvement to 3.44 per cent for the reporting quarter.

Vaidyanathan declined to share any outlook on it but said that the number is influenced by the composition of the loan book and the cost it pays for the deposits, and it used to be 4-4.4 per cent in the past for the bank.

The bank, which reported an 18.4 per cent deposit growth on a normalized basis for FY24, will not depend on rates as an incentive to draw liabilities, Vaidyanathan said, adding that attracting retail money is the priority for it.

It reported a loan growth of over 17 per cent during the fiscal year gone by on a normalised basis, accounting for the loans which came in after the merger with HDFC Ltd, Vaidyanathan said, declining to give any outlook.

The credit-to-deposit ratio stood at 104 per cent, he said, explaining that it has shot up following the merger and if one were to exclude the impact of the same, it is at a flat level.

Its overall slippages came at Rs 7,300 crore for the quarter, and there has not been any uptick in the unsecured book stress despite the regulatory concerns on it, Vaidyanathan said.

The gross non-performing assets ratio improved marginally to 1.24 per cent from 1.26 per cent in the quarter-ago period.

Overall provisions came at Rs 13,510 crore for the March quarter, which included the floating provision and also a Rs 1,500 crore hit on account of ex-gratia for staff.

There was a Rs 1,200 crore release on provisions of Rs 1,200 crore for alternative investment funds investment done in the December quarter, he said.

It opened nearly 650 branches in the March quarter to take its overall network to 8,738 branches. Without giving an outlook for FY25, Vaidyanathan said the aim to have over 12,000 branches remains.

The cost-to-income ratio was at 38 per cent and stood at 41.3 per cent if one were to exclude the impact of transaction gains and the ex-gratia provision, as per a bank statement.

When asked about news reports of Japanese lender MUFG interested in picking up a 20 per cent stake in the in-house non-banking finance company HDB Financial Services, Vaidyanathan said all the options are being explored given the necessity to list the entity by September 2025 but declined to specifically confirm or deny the talks.

The overall capital adequacy of the bank stood at 18.8 per cent as of March 31, 2024, including a tier-I ratio of 16.8 per cent.