HDFC Bank Q3 Results Review - Beat In Estimates; Deposits Accretion Remains Key: ICICI Direct

ICICI Direct Report

HDFC Bank Ltd. beat our estimates on the net interest income and profit after tax front as business growth continued its healthy traction. Asset quality was steady QoQ with gross non-performing asset and net non-performing asset ratio at 1.23% and 0.33%, respectively.

Net interest income was up 24.6% YoY and 9.4% QoQ to Rs 22987 crore (ahead of our estimates of Rs 21834 crore), aided by healthy loan growth of 19.5% YoY and steady net interest margins at 4.1% on a sequential basis.

HDFC Bank's other income increased 11.9% QoQ, 3.9% YoY, mainly driven by fee and commission income and forex income, which was up 4.3% QoQ (19% YoY) and 13.3% QoQ (13% YoY) at Rs 6052 crore and Rs1074.1 crore, respectively.

Opex was up 26.5% YoY and 11% QoQ, whereas cost/income ratio was steady at 39.6% (versus 37% in Q3 FY22). Provisions declined both QoQ and YoY at Rs 2806.4 crore, resulting in credit cost of 0.74% versus 0.87% in Q2 FY23 (0.94% in Q3 FY22).

Net profit for the quarter beat our estimates at Rs 12259.5 crore up 18.5% YoY and 15.6% QoQ (versus our estimate of Rs 12021.4 crore). Strong profit after tax resulted in highest return on asset at 2.24% (annualised).

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