India’s largest private bank posted 20% higher profit, beating estimates

India’s largest private bank, HDFC Bank on Saturday reported a 20% jump in net profit for the quarter ended September 2022, driven by higher credit growth and increased income from other sources. The private bank saw a net profit of Rs. 106.05, which was higher than the estimates of analysts who had expected Rs. 105.97 billion as a net profit, according to Refinitiv IBES data.

Both net interest income and income from other sources saw double-digit growth, with interest income rising 18.9% to Rs. 210.21 billion and earnings from other sources increased 16.7%, with earnings from fees and commissions improving and foreign exchange and derivatives revenues also improving.

HDFC bank All sectors including commercial, retail, rural banking and even corporate and wholesale credit saw a high pace of growth. Bank’s advances also witnessed a decent growth of 23.4%.

Compared to other commercial banks, where deposit growth is around 9.2%, HDFC Bank saw a higher growth in deposits, which grew by 19% with growth in both fixed deposits and current and savings account deposits.

Corner interest Margin, which is a key indicator of the bank’s profitability, stood at 4.3% for HDFC Bank. The bank is also well capitalized with a capital adequacy ratio of 18%.

The bank’s asset quality is also improving with gross non-performing assets (NPAs) at 1.23%, down from 1.28% in the June quarter, with net NPAs also declining by around 2% during the same period.

Banks’ overall provisions were slightly higher at Rs. 32.4 billion in the September quarter. During the previous quarter, the total provision stood at Rs. 31.87 billion

The Reserve Bank of India (RBI) informed that as of September 23, India’s credit growth was at a multi-quarter high of 16.4% year-on-year. Rating agency CARE Ratings claims that low base, high retail credit and rising working capital demand amidst high inflation have helped propel credit growth.

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With inputs from Reuters.

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