HDFC Bank Q1 results: Asset quality declines marginally, but overall a healthy show; six key highlights from earnings

livemint.com:

HDFC Bank reported a healthy April-June quarter scorecard of the current financial year (Q1FY24) on Monday as barring a mild miss on the asset quality sequentially, the numbers were better than Street estimates. Analysts expected HDFC Bank to report a standalone net profit of ₹11,580 crore for the April-June period, showing an increase of 25.9 per cent compared to the same period last year. The bank's actual profit numbers were above this estimate.

"India's largest private sector lender, HDFC Bank Ltd., reported decent Q1FY24 results, with net profit beating market estimates. However, there was some visibility of weak NII and asset quality wherein the bank’s NII missed market estimates and NPAs rose marginally on a sequential basis," said Shreyansh Shah, Research Analyst at StoxBox. Shah highlighted that the improvement in profitability was on account of lower provisioning and growth in other income which had trading and mark-to-market gain and recoveries.

"Though advances and deposits were marginally higher on a sequential basis, we feel that the merged entity will further improve the performance going forward," said Shah. "We expect the subdued performance of NIMs in the current quarter to not continue going forward as there will be an improvement in NIMs on account of the merger which took effect from July 01, 2023. Also, the subsidiaries like HDFC Life, HDFC AMC and HDFC Ergo which were erstwhile subsidiaries of HDFC Ltd.

will have huge distribution leverage as they are now the subsidiaries of HDFC Bank. These subsidiaries will get the benefits of the bank’s 8,500 branches plus the addition of 1,500 branches every year, thereby increasing the SOTP value of HDFC Bank," said Shah. Here are six key points from the