HDFC Bank PAT ticks up 5% amid pressure
HDFC Bank reported a 4.7% rise in standalone net profit for the second quarter, while margin pressure weighed on core profitability. Net interest income rose 9.7% as loans and deposits grew. The lender is also set to welcome a new chief executive this month, ending prolonged succession uncertainty.
Mumbai-based HDFC Bank reported a modest rise in second-quarter profit growth of 4.7%, as margin pressures and rising bond yields partially undermined the effects of strong asset and deposit growth. The bank anticipates the appointment of a new chief executive later this month, putting an end to prolonged uncertainty over leadership succession.
The lender's standalone net profit increased to 19,510 crore, up from 18,640 crore a year earlier, driven by higher net interest income (NII) and a significant expansion in its loan book. NII, which represents the core income from lending, grew by 9.7% year-over-year to 34,620 crore. Meanwhile, market capitalization has decreased by 27% over the past year, primarily due to the ongoing uncertainty surrounding leadership succession.
Softening asset yields impacted core profitability, with the bank's net interest margin (NIM) falling to 3.16% from around 3.27% a year ago. Return on assets also declined to 1.78%. "We have seen a fair amount of underlying business momentum in various metrics, especially in retail and MSMEs," said outgoing CEO Sashidhar Jagdishan in a post-earnings call.
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