HDFC Bank matched September-quarter profit expectations as strong lending and deposit growth was offset by narrower margins and weaker treasury income.
HDFC Bank reported September-quarter profit in line with analyst expectations even as margins narrowed, underscoring how India’s biggest private lender is growing briskly while earning less on each rupee of assets.
Standalone net profit rose 4.7% from a year earlier to 195.1 billion rupees, or about $2.1 billion, matching the Bloomberg consensus estimate of 195.89 billion rupees. Net interest income, the gap between what the bank earns on loans and pays on deposits, increased 9.7% year on year, but its core net interest margin slipped to 3.16% from 3.3% a year earlier. The bank also said it raised $11.5 billion through an incentivised programme for foreign-currency non-resident deposits.
Lending and deposit growth remained strong. Loans increased 16.3% from a year ago and deposits climbed 18.8%, reflecting robust demand in India’s banking system as corporate borrowing picks up and consumer spending stays resilient. Analysts said the new FCNR deposits should support lending in coming quarters, but the timing gap between raising funds and deploying them is likely to keep pressure on margins in the near term. Bernstein’s Pranav Gundlapalle said balance-sheet growth remained solid and asset quality held up, though weaker treasury income and slimmer spreads weighed on profitability.
The earnings update also comes against a sensitive governance backdrop. Earlier this month, the Reserve Bank of India approved Anup Bagchi for a three-year term as chief executive starting on October 27, giving HDFC Bank the chance to bring in an external leader as it tries to steady investor confidence. The board also approved the planned departure of deputy managing director Kaizad Bharucha at year-end and reappointed independent director Lily Vadera for another three years. Governance concerns have shadowed the lender since March, when then part-time chairman Atanu Chakraborty resigned unexpectedly and said that certain events and practices at the bank conflicted with his personal values and ethics, an assertion HDFC Bank has rejected.
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