India’s largest private-sector lender, HDFC Bank, reported a 5% year-on-year increase in its standalone net profit for the first quarter of the financial year, broadly matching market expectations. The bank posted a net profit of ₹190.6 billion for the quarter ended June 30, compared with ₹181.5 billion in the same period last year.
The earnings were supported by healthy growth in retail lending, improved loan demand, and significantly lower provisions for bad loans. Analysts had projected quarterly profit of around ₹191.9 billion, making the bank’s performance largely in line with estimates.
Investor attention has remained focused on HDFC Bank following the resignation of former part-time Chairman Atanu Chakraborty in March, who stepped down citing ethical concerns. The bank later completed an independent legal review, which found no evidence supporting the issues raised. Last month, former bureaucrat Rajiv Kumar was appointed as the new Chairman, while the process of reappointing CEO Sashidhar Jagdishan is still pending.
The banking sector has witnessed a recovery in credit demand since April, with increased borrowing in personal loans, gold-backed loans, and financing for small businesses. Government-backed credit guarantee schemes introduced during disruptions caused by the Iran conflict have also contributed to stronger lending activity.
HDFC Bank’s total advances grew 15.4% year-on-year, led by robust growth in retail loans such as home loans and personal finance. Deposits also recorded healthy growth of 13.3% compared to the previous year.
The bank’s Net Interest Income (NII)—a key measure of profitability—rose 6.7% to ₹335.3 billion, while the Net Interest Margin (NIM) remained steady at 3.26%. Although stable, the margin continues to remain below the nearly 4% level recorded before HDFC Bank’s merger with HDFC Ltd. in 2023, a key metric closely watched by investors evaluating the success of the merger.
On the asset quality front, the bank’s Gross Non-Performing Asset (GNPA) ratio increased slightly to 1.17% from 1.15% in the previous quarter. However, provisions and contingencies declined sharply by 78% year-on-year to ₹30.6 billion, reflecting improved management of stressed assets.
Meanwhile, non-interest income came under pressure. Revenue from treasury operations and fee-based services fell 41% sequentially to ₹128.21 billion, impacted by rising bond yields and regulatory restrictions on foreign exchange options introduced by the Reserve Bank of India.
Overall, HDFC Bank delivered a stable quarterly performance, supported by steady credit growth and improved asset quality, even as margin expansion and treasury income remained under pressure.
