Post-merger HDFC Bank earnings beat estimates

livemint.com:

₹15,976 crore in the quarter ended 30 September from ₹10,605 crore in the year-ago period. That exceeded analysts’ estimates of ₹14,120 crore in a Bloomberg survey. As forecast by the management in a call with investors in September, the bank saw its net interest margin (NIM) narrow to 3.6% at the end of September from 4.1% in the preceding quarter.

However, the management did not say when the bank expects to achieve 3.7-3.8% pro-forma merged NIM. “We had indicated going into the merger, there was a build of liquidity to tide over the merger management, and 25-30 bps impact on margin is coming from there," said Srinivasan Vaidyanathan, chief financial officer of HDFC Bank. “Our margin has been 4%.

Now, when you have a debt-funded balance sheet with a mix of funding, the cost of borrowing is higher than the cost of deposit. Over a period of time, deposits will replace borrowing. Then margin will start to improve," he added.

The bank’s core income grew by 30% to ₹27,385 crore in the quarter ended 30 September from ₹21,021 crore in the year earlier. Advances grew by 58% to ₹23.54 trillion at the end of the September quarter. The growth in advances was largely on account of the merged book of HDFC.

Deposits grew 30% to ₹21.72 trillion as of 30 September. Vaidyanathan said he is confident that the bank will continue its focus on adding ₹1 trillion in deposits every quarter. The current and savings account (Casa) ratio fell to 37.6% of total deposits as of 30 September, compared with 42.5% in the previous quarter.