HDFC Bank Q1 Profit Beats Estimates Despite Higher Provisions

HDFC Bank, India's largest private sector lender, reported a 12% YoY increase in Q1 net income to 181.55 billion rupees, beating the average analyst estimate of 176.18 billion rupees. The bank's profit came despite increased provisions on its balance sheet.

HDFC Bank, India's largest private sector lender, reported a 12% year-on-year (YoY) increase in its Q1 net income to Rs 18,155 crore, surpassing the average analyst estimate of Rs 17,616 crore [3]. This growth came despite an increase in provisions on its balance sheet, indicating a cautious approach to risk management.

The bank's net interest income (NII) grew by 6% YoY to Rs 77,470 crore, driven by a 12% YoY increase in interest income to Rs 73,033 crore [3]. However, the bank's net interest margin (NIM) is expected to decline due to recent rate cuts by the Reserve Bank of India (RBI) [2].

HDFC Bank also announced the issuance of its first-ever bonus shares in the proportion of 1:1, with one equity share for every fully paid-up equity share held by members as of the record date of August 27 [3]. Additionally, the bank declared a special interim dividend of Rs 5 per equity share for FY 2025-26, to be paid on August 11, 2025 [3].

The bank's Q1 net profit growth was driven by a 12% YoY increase in its standalone net profit to Rs 18,155 crore, compared to Rs 16,175 crore in the year-ago period [3]. This growth was supported by a 10.3% YoY increase in net interest income to Rs 32,065 crore [1].

HDFC Bank's asset quality remains strong, with non-performing assets (NPAs) and slippages under control. However, the bank is expected to face increased slippages in the current quarter due to weak agricultural loan performance [1].

Looking ahead, HDFC Bank is expected to maintain its strong performance, driven by favorable policy actions and improved asset quality. The bank's management expects near-term corrections in net interest margins (NIMs) to be offset by rising asset quality in FY27 [1].

References:
[1] https://www.cnbctv18.com/market/hdfc-icici-bank-q1-results-live-updates-loan-deposit-growth-npa-provisions-slippages-bonus-dividend-share-price-liveblog-19639738.htm
[2] https://www.moneycontrol.com/news/business/earnings/hdfc-bank-q1-net-profit-seen-up-1-5-yoy-to-rs-16-422-2-cr-prabhudas-lilladher-13280528.html
[3] https://m.economictimes.com/markets/stocks/earnings/hdfc-bank-q1-results-pat-rises-12-yoy-to-rs-18155-crore-bank-announces-11-bonus-issue/articleshow/122780608.cms