Analysts say HDFC Bank Q4 numbers in line with expectations but pressure seen on NIMs

The lender recorded a net interest income (NII) of Rs 29,007 crore, slightly lower than the market estimates of Rs 29,172 crore.

Private sector HDFC Bank’s numbers for the January-March quarter of financial year 2023-24 were broadly in line with the expectations, analysts said, adding the falling net interest margin (NIM) remains a concern.

"HDFC Bank reported broadly in line performance in Q4FY24. The core credit cost continued to remain lower and higher other income driven by stake sale gain in HDFC Credila or tax reversal provisions offsetted higher opex and higher contingent provisions impact on RoA. Asset quality remained broadly stable,” said Rahul Malani, research analyst, Sharekhan by BNP Paribas.

And Aditya Shah, Advisor, Hercules Advisors, said that the falling NIMs were a concern for the bank. “NIMs have fallen below 4 percent and core NIMs are still at 3.44 percent. This needs to improve over the coming quarters.”

Also read: HDFC Bank Q4 results: Key highlights from the earnings report

Malani said: “The bank is gradually recouping the margins as the bank substitutes the high-cost borrowings with deposits and the changing loan mix towards retail over the next couple of quarters."

The lender’s NIMs fell from 4.1 percent in June 2023 to 3.4 percent in March 2024.

The country’s largest private sector bank, HDFC Bank, on April 20, reported a net profit of Rs 16,511 crore for January-March quarter of the financial year 2023-24, marking a 0.84 percent jump compared to Rs 16,373 crore last quarter.

The net revenue of the lender grew to Rs 47,240 crore including transaction gains of Rs 7340 crore from the stake sale in subsidiary HDFC Credila Financial Services during the quarter. The lender recorded a net interest income (NII) of Rs 29,007 crore, slightly lower than the market estimates of Rs 29,172 crore.

The core net interest margin (NIM) was at 3.44 percent on total assets, and 3.63 percent based on interest-earning assets. In the last quarter, the NIM was at 3.40 percent on total assets.  The bank's gross non-performing asset (NPA) stood at 1.24 percent, down from 1.26 percent in the last quarter. On the other hand, net NPA for the quarter stood at 0.33 percent compared to 0.31 percent.

Also Read: HDFC Bank Board declares dividend of Rs 19.5 per share for FY24

The total deposits of the lender stood at Rs 23.79 lakh crore during the quarter ended March 31, 2024. Of the total current and savings account (CASA) deposits of the bank, current account deposits stood at Rs 3.1 lakh crore, and savings account deposits at Rs 5.97 lakh crore. Total advances of the bank stood at Rs 25.07 lakh crore. Overseas advances constituted 1.8 percent of total advances.