HDFC Bank Q3 results 2023: The private lender reported its net profit at 12,259.50 crore against Q3FY22 net profit of 10,342.20 crore

HDFC Bank Q3 Results 2023: Surpassing street projections, HDFC Bank Ltd. reported a significant increase in net profit and net interest income on a year-over-year (YoY) basis. The private lender had an increase of over 18.50% YoY in the most recent quarter that ended in December 2022, reporting a net profit of Rs. 12,259.50 crore in Q3FY23 compared to a net profit of Rs. 10,342.20 crore in Q3FY22.

The private lender HDFC Bank revealed its Q3 results for 2023 and revealed strong growth in net interest income (NII). In the most recent quarter, which concluded in December 2022, HDFC Bank reported NII of 22,987.9 crore, up over 24.60% from its NII of 18,443.50 crore in Q3FY22.

Both quarterly (QoQ) and yearly provisioning have decreased at the private lender (YoY). HDFC Bank recorded provisions of 2,806.4 against 3,240.1 crore in Q2 FY23’s third quarter. HDFC Bank declared provisions of 2,994 crore for Q3 FY22. As a result, the private bank reduced its provisions by roughly 13.40% on a quarterly basis and 6.26 percent on an annual basis.

For the quarter ending December 31, 2022, HDFC Bank’s net revenue increased by 18.3% to 31,487.7 crore from 26,627.0 crore for the quarter ending December 31, 2021. Net revenue increased by 22.1% over the quarter that concluded on December 31, 2021, when net trading and mark-to-market income were excluded.

For the quarter ended December 31, 2022, the four components of other income were fees & commissions, which totaled 6,052.6 crore (up from 5,075.1 crore in the corresponding quarter the previous year), foreign exchange & derivatives revenue, which totaled 1,074.1 crore (up from 949.5 crore), net trading and mark-to-market income, which totaled 261.4 crore (up from 1,046.5 crore in the corresponding quarter the previous year), and miscellaneous income, which included revenue Over the quarter ended December 31, 2021, other income—which excludes net trading and mark-to-market income—grew by 15.4%.

On both a QoQ and YoY basis, HDFC Bank was able to report improvement in the total debt to total asset ratio. In the third quarter of the current fiscal year, HDFC Bank’s total debts to total assets are 9.18% higher than they were in the second and third quarters of the previous year (9.29% and 9.82%, respectively).

The private lender’s overall credit cost ratio was 0.74 percent, down from 0.94 percent for the three months ending December 31, 2021.

In comparison to 1.23 percent as of September 30, 2022 (1.03 percent excluding NPAs in the agriculture business), and 1.26 percent as of December 31, 2021, gross non-performing assets were at 1.23 percent of gross advances as of December 31, 2022. (1.04 per cent excluding NPAs in the agricultural segment). As of December 31, 2022, net non-performing assets represented 0.33 percent of net advances.

The consolidated net profit of HDFC Bank increased by 22.30% in Q2 FY23 to 11,125.21 crore.

On Friday, the share price of HDFC Bank reached 1,601. On the NSE, the banking stock has increased by more than 18% during the past six months. However, throughout the past month, HDFC Bank shares have been trading sideways to down, losing close to 3.50 percent.

According to Basel III standards, HDFC Bank had a total capital adequacy ratio of 19.4%, which included earnings for the nine months that ended on December 31. A capital conservation buffer of 2.5% is included in the regulatory requirement of 11.7%. Because HDFC Bank is a domestic systemically important bank, there is an additional 0.2% requirement for the cushion.

As of December 31, 2022, the private bank’s total deposits stood at Rs 17.33 trillion, an increase of 19.9% year over year. Low-cost deposits, known as current account savings accounts (CASA), increased by 12%, with savings account deposits totaling Rs. 5,35,206 crore and current account deposits totaling Rs. 2,27,745 crore. As of December 31, 44% of all deposits were CASA deposits.

The bank’s total advances as of December 31 were Rs 15.07 trillion, up 19.5% from the previous year. Domestic retail loans increased 21.4% year over year, while loans to businesses and rural banks increased 30.2%. Corporate and other wholesale loans increased by 20.3%, and offshore advances made up 2.8% of all loans.

HDFC Bank Q3 Results 2023 – 4 big takeaways from the earning

The following are the top four points from the bank’s earnings report card:

1. Net profit jumps

The lender’s consolidated net profit increased by 19.9 percent during the three months ending in December 2022. It announced a net profit of Rs 12,698 crore, up 18.5 percent from the quarter ended December 31, 2022, and beating market expectations.

The bank’s net revenue for the December quarter increased by 18.3 percent from the same period last year to Rs 31,488 crore.

The difference between interest generated and interest paid, or net interest income (NII), increased by 24.6 percent to Rs 22,987 crore for the quarter ended December 31, 2022, from Rs 18,443 crore.

2. Aggressive deposit growth

The bank’s total deposits increased by 19.9 percent to Rs 17,33,204 crore, indicating strong growth.

With savings account deposits at Rs 5,35,206 crore and current account deposits at Rs 2,27,745 crore, Current Account Savings Account (CASA) deposits increased by 12.0 percent.

The lender’s time deposits increased to Rs 9,70,253 crore, a 26.9% increase over the same quarter last year. As of December 31, 2022, 44.0 percent of all deposits were cheaper CASA deposits.

3. Slight improvement in asset quality

Comparing the quarter that ended in December 2022 to the same period the previous year, the bank’s asset quality somewhat improved.

Compared to December 31, 2021, gross non-performing assets (NPAs) were at 1.23 percent. Net NPAs decreased from 0.37 percent last year to 0.33 percent of net advances.

4. Capital ratios remain healthy

The bank’s overall capital adequacy ratio (CAR) for the quarter that ended in December 2022 was 19.4% compared to the legal minimum of 11.7 %.

Tier 1 CAR was 17.2 percent, down from 18.4 percent the year before.

HDFC Bank Q3 Result 2023: Other Highlights

Operating costs were Rs 12.463.6 crore for the quarter that ended on December 31, 2022, up 26.5% from Rs 9,851.1 crore for the same period the year before. For the quarter, the cost-to-income ratio was 39.6%.

PPOP, or pre-provision operating profit, was Rs 19,024.1 billion. PPOP increased by 19.3% compared to the three months ended December 31, 2021, net trading and mark-to-market income excluded.

The quarter ended December 31, 2022, with provisions and contingencies of Rs 2,806.4 crore as opposed to Rs 2,994.0 crore for the quarter ended December 31, 2021. The overall credit cost ratio was 0.74%, down from the quarter ending December 31, 2021, when it was 0.94%.

HDFC Bank Q3 Result: Most brokerages maintain estimates after strongest NII growth in 14 quarters

After the bank’s December quarter results exceeded expectations, the majority of brokerages following HDFC Bank have kept their estimates on India’s largest private lender at current levels.

With a price objective of Rs 2,000, BofA Securities has kept its buy recommendation on the stock in place. According to the brokerage, the bank is currently moving quickly to expand its branch network, and the net interest margin will gradually catch up.

During the month of December, HDFC Bank’s net interest income, or core income, increased at its fastest rate in 14 quarters.

In comparison to the same period last year, HDFC Bank’s net interest income increased by 25% to Rs 22,987 crore for the December quarter.

The net interest margin reached 4.3 percent, which was a 10-quarter high.

In contrast to projections of Rs 12,106 crore, HDFC Bank posted a net profit of Rs 12,259.5 crore. In comparison to the same period last year, the bottom line increased by 19%.

Bernstein has kept its outperform rating and a Rs 2,200 price target. It credited sound credit growth for the profitability growth. According to the brokerage, favourable asset quality trends and a notable sequential improvement in non-interest income helped to balance the ongoing high opex rise.

The bank’s asset quality remained constant. The quarter’s gross non-performing assets (NPA) were 1.23 percent, unchanged from the September quarter, and the quarter’s net NPA were likewise unchanged at 0.33 percent.

Gross and net NPA were anticipated by ICICI Securities to be 1.21 percent and 0.32 percent, respectively, for the quarter.

According to Kotak Institutional Equities, the merger of HDFC Bank and HDFC continues to be a short-term hurdle because deposit mobilisation is a changing problem. However, the brokerage has kept its buy rating and Rs. 1,800 price objective for the stock.

The bank’s provisions were Rs 2,806 crore, which was 6.2 percent less than the prior year. Provisions fell 13.4% from the September quarter to the current one. Additionally, the provision number was the lowest in 13 quarters.

In its quarterly business update published earlier this month, HDFC Bank said that both advances and deposits increased by almost 20% year over year. However, compared consecutively, loan growth was the poorest it had been in four quarters and the weakest it had been in six.

The bank’s CASA Ratio dropped from 45.4 percent in the September quarter to 44 percent, an eight-quarter low.

As the lender continued to open new branches, the bank’s cost-to-income ratio reached its highest level in 15 quarters. The lender sequentially added 684 branches, bringing the total number of branches to 7,183.

The sole increase in share price for HDFC Bank over the past year has been 3.6 percent.