HDFC Bank Posts Strong Quarterly Profit on Loan Growth and Trading Gains
Mumbai – India’s HDFC Bank reported stronger-than-expected earnings for the second quarter, driven by steady loan growth and robust trading income, even as lending margins remained under pressure.
The results highlight the lender’s continued resilience amid evolving market conditions.
The country’s largest private bank by market capitalization posted a standalone net profit of 186.4 billion rupees ($2.12 billion) for the three months ended September, up from 168.21 billion rupees in the same quarter last year.
Analysts had anticipated a profit of 177.18 billion rupees, according to LSEG data.
Net interest income rose 4.8% to 315.5 billion rupees, supporting overall earnings, though the bank’s net interest margin (NIM) fell slightly to 3.27% from 3.35% in the previous quarter.
HDFC Bank Chief Financial Officer Srinivasan Vaidyanathan said in a conference call that margins are expected to improve over the coming quarters as deposits reprice in line with market rates.
The bank also saw significant gains from trading and mark-to-market activities, which totaled 23.9 billion rupees, up sharply from 2.9 billion rupees in the same quarter last year.
This contributed to a healthy overall performance despite a slightly compressed lending margin environment.
Loan growth remained strong, rising 9.9% year-on-year, supported by higher demand from small and mid-sized businesses.
HDFC Bank’s deposits grew 12% over the year, reflecting continued confidence following its merger with parent company HDFC two years ago.
Chief Executive Officer Sashidhar Jagdishan noted that economic activity in India has visibly picked up following recent tax cuts, contributing to a recovery in credit demand.
He said, “We are seeing this positive momentum reflected in our loan growth for the September-ended quarter, and we expect demand to strengthen further in the second half of the fiscal year.”
HDFC Bank expects its loan book to grow broadly in line with the banking system this financial year, with prospects for faster expansion next year as market conditions remain favorable.
Asset quality showed further improvement, with the gross non-performing asset (NPA) ratio declining to 1.24% at the end of September from 1.4% in the previous quarter.
The bank increased provisions for potential future stressed assets to 35 billion rupees, up nearly 30% from a year ago, ensuring continued financial resilience.
Over the past year, Indian banks, including HDFC, have been strengthening underwriting norms and maintaining higher provisions to address potential stress in retail segments such as personal loans and credit cards.
These measures have contributed to the stability of the bank’s financial position and prepared it for future growth.
Overall, HDFC Bank’s latest quarterly results underscore its robust performance, steady growth trajectory, and disciplined approach to risk management, positioning it well for the coming months amid continued economic recovery in India.
