HDFC Q4 Earnings Highlights: HDFC Bank Q4 Takeaways: Earnings Growth Surpasses 20% for the First Time Since Q3FY20, But Misses Estimates

NEW DELHI: , finally posted quarterly earnings growth of over 20%, which it has been known for in the past, even though the earnings figure itself missed analysts’ estimates by a small margin. Net interest income (NII) growth was double-digit, but it was also lower than Street’s estimates. Asset quality improved and the net interest margin (NIM) stood at 4%, while the cost of credit increased slightly.

Here are the key takeaways from quarterly lender earnings:

Earnings growth finally exceeds 20%
Market watchers would say how the private lender has been consistent with earnings growth in the past. While the past two years have been challenging for India Inc as a whole, the March quarter results saw HDFC Bank once again achieve growth of over 20%, the first example after growing 33% in third quarter of fiscal 2020.



The lender reported a 22.8% year-on-year (YoY) increase in net profit for the March quarter to Rs 10,055.20 crore after forecasting Rs 2,989.50 crore in tax.

However, it missed the 24-28% growth that many analysts had expected for the quarter. An analyst poll on ET NOW had forecast a profit figure of Rs 10,200 crore.

Asset quality improves, provisions increase
March was the third consecutive quarter when HDFC Bank reported lower gross NPAs as a percentage of total advances. It stood at 1.47% in the June 2021 quarter. Since then, it has eased.

Gross non-performing assets as a percentage of total advances were 1.17% for the March quarter, compared to 1.26% in the December quarter and 1.32% in the year-ago quarter. Total provisions represented 182% of gross NPA as of March 31.

Provisions and contingencies for the quarter increased sequentially to Rs 3,312.35 crore from Rs 2,993.98 crore in the December quarter, but were lower than the yearly quarter’s Rs 4,693.70 crore previous.

Double digit NII growth but…
Net interest income (NII), the difference between the interest income a bank earns from its lending business and the interest it pays out to depositors, rose 10.2% year-on-year to Rs 18,872.70 crore compared to Rs 17,120.20 crore in the prior year quarter, but estimates missed. An ET NOW poll had pegged the NII figure at Rs 19,400 crore.

Net interest margin (NIM) was 4% on total assets and 4.2% on an interest-earning assets basis. The NIM for the December quarter was 4.2% and 4.1% in the prior year quarter.

Advances and deposits increase
Deposits for the quarter increased by 16.8% year-on-year to Rs 15,59,217 crore. Advances increased by 20.8% year-on-year to Rs 13,68,821 crore for the quarter. The bank said it continued to add new accountability relationships at a steady pace of 24 lakh during the quarter. The liquidity coverage ratio, he said, stood at 112%, well above regulatory requirements.

Stable credit costs
Total cost of credit for the quarter was 0.96%, slightly higher than 0.94% in the December quarter and 1.64% in the same quarter last year. The total balance sheet increased by 18.4% year-on-year to Rs 20,68,535 crore from Rs 1,74,6871 crore.

The bank said its non-interest income for the quarter rose 28.8% year-on-year to Rs 7,637.10 crore from Rs 7,593.90 crore in the year-ago quarter. Trading revenue grew by 10.6% year-on-year while commission revenue stood at Rs 5,630 crore. Pre-provision operating profit excluding trading income was Rs 16,357 crore, up 10.2%.

CASA deposits up 22%
CASA deposits increased by 22% for the quarter, with savings account deposits at Rs 511,739 crore and current account deposits at Rs 239,311 crore. Term deposits were Rs 8,08,168 crore, up 12.3% year-on-year.

CASA deposits accounted for 48.2% of total deposits as of March 31, 2022, the bank said.

The total balance sheet size as of March 31, 2022 was Rs 2,068,535 crore, up 18.4% from Rs 1,746,871 crore in the prior year quarter.

Aggressive branch additions
The bank added 563 branches and 7,167 employees during the quarter and 734 branches and 21,486 employees during the year.

“This, along with other investments made during the year, will allow the bank to capitalize on the growth opportunity,” HDFC Bank said.

As of March 31, 2022, the bank’s distribution network had 6,342 branches and 18,130 ATMs/cash deposit and withdrawal machines (CDMs) in 3,188 cities, compared to 5,608 branches and 16,087 ATMs/CDMs in 2,902 cities in the prior year quarter.

“50% of our branches are located in semi-urban and rural areas. In addition, we have 15,341 commercial correspondents, who are mainly run by common service centers (CSC). The number of employees was 1,41,579 as of March 31, 2022,” the bank said.