Bank Earnings

HDFC Bank Q1 Results: 10 Quarterly Results Highlights

On Monday, shares of HDFC Bank will be in focus after its earnings announcement. This week on Friday, shares of HDFC Bank closed at 1363.85 each per 12.55 or 0.93% on BSE.

Here are 10 key highlights from Q1FY23 earnings:

Interest income:

HDFC Bank recorded net interest income (NII) of 19,481.4 crores in Q1FY23 up 14.5% from 17,009 crores in the same period last year, driven by advances and deposits which recorded growth of 22.5% and 19.2% respectively. Also, the total balance sheet, which grew by 20.3%, supported the performance.

As of Q1FY23, the core net interest margin was 4% on total assets and 4.2% on an interest earning assets basis.

The lender continued to add new accountability relationships at a steady pace of 2.6 million during the quarter.

Other income:

During the quarter, the four components of other income were – fees and commissions from 5,360.4 crore from 3,885.4 crore in Q1FY22; while foreign exchange and derivatives income amounted to 1,259.3 crore more 1,198.7 crore from Q1FY22; loss on disposal/revaluation of investments of 1,311.7 crore more from 601 crore in Q1FY22; and miscellaneous income including recoveries and dividend amounted to 1,080.2 crore from 603.5 crore from Q1FY22.

Other income excluding Mark to Market trading losses increased 35.4% year-on-year.

Net revenue:

HDFC Bank recorded a profit before tax (PBT) of 12,180.1 crores in Q1FY23, up 18.2% from the corresponding quarter of the previous year. The PBT comes after taking into account the trading and Mark to Market losses of 1,311.7 crores in the quarter.

After tax deduction of 2,984.1 crores, HDFC Bank made a net profit of 9,196 crores in Q1FY23, up 19% from the same period last year.

Provisions:

Provisions and contingencies arrived at 3,187.7 crores in Q1FY23 vs. 4,830.8 crores in the same quarter a year ago.

As of June 30, 2022, the bank held provisions of 1,451 crores and contingent provisions amounted to 9,630 crore. Total provisions, which include specific, floating, contingent and general provisions, amounted to 170% of gross NPLs in the quarter under review.

Operating income before provision (PPOP) amounted to 15,367.8 crores. Non-trading PPOP and Mark to Market losses increased 14.7% year-over-year.

Asset quality:

As of June 30, 2022, gross non-performing assets amounted to 1.28% of gross advances (1.06% excluding seasonal agricultural NPA) compared to 1.47% in Q1FY22 (1.26% excluding agricultural NPA seasonal). Quarter 2022, the gross NPA was 1.17%.

In value, the gross NPA at 18,033.67 crores in Q1FY23 vs. 16,140.96 crores in Q4FY22 and 17,098.51 crores in Q1FY22.

Net non-performing assets were 0.35% versus 0.32% in Q4FY22 and 0.48% in Q1FY22.

The total cost of credit ratio was 0.91% compared to 1.67% in the June quarter last year.

Deposits:

The bank recorded robust growth in total deposits at 1,604,760 crore in Q1FY23 up 19.2% YoY. CASA deposits soared 20.1% with savings account deposits at 5,14,063 crore and current account deposits at 2,20,584 crores. In addition, in the first quarter, term deposits reached 8,70,113 crore up 18.5% YoY – resulting in CASA deposits accounting for 45.8% of total deposits.

Advances:

In Q1FY23, HDFC Bank recorded total advances of 1,395,068 crore increasing by 21.6% YoY. Gross of transfers by interbank participation certificates and rediscounted bills, total advances increased by approximately 22.5% compared to the same period last year.

During the quarter, personal loans increased 21.7%, commercial and rural bank loans jumped 28.9%, and corporate and other wholesale loans jumped 15.7%. Foreign advances constituted 3.5% of total advances.

Capital adequacy:

HDFC Bank’s total capital adequacy ratio (CAR), in accordance with Basel III guidelines, was 18.1% as of June 30, 2022, compared to 19.1% for the corresponding period last year. This is above the regulatory requirement of 11.7% which includes a capital conservation buffer of 2.5% and an additional requirement of 0.2% due to the bank being identified as a significant national bank systematic (D-SIB).

Level 1 CAR was 17.1% in Q1FY23, compared to 17.9% in Q1FY22. Meanwhile, the Common Equity Tier 1 capital ratio is 16.5% in Q1FY23. Risk-weighted assets amount to 1,398,442 crore against 1,153,559 crores in the June 2021 quarter.

New additions:

The bank added 36 branches and 10,932 employees during the quarter. Over the past twelve months, the lender has added 725 branches and 29,038 employees.

Network:

The bank’s distribution network stood at 6,378 branches and 18,620 ATMs/cash deposit and withdrawal machines (CDMs) in 3,203 cities/towns in the first quarter of FY23, compared to 5,653 branches and 16,291 ATMs/CDMs in 2,917 cities/municipalities in the June 2021 quarter.

As of June 30, 2022, the bank’s total number of employees is 152,511, compared to 123,473 in Q1 last year.

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