HDFC BANK Q2 RESULTS 2024: PROFIT SOARS, ABOVE EXPECTATION

HDFC Bank reported its September quarter numbers on Monday afternoon. The results are above market expectations. Let us look at HDFC Bank's Q2FY24 quarterly numbers in detail - the first result post-merger with HDFC Limited.

About HDFC Bank

The company needs no introduction. HDFC Bank and HDFC Limited merger is completed, which makes it one of the biggest banks in the world. HDFC Bank is one of the largest private sector banks in India. It was established in 1994. HDFC Bank provides a wide range of banking and financial services to individuals, businesses, and corporates.

Crucial Parameters

• PE Ratio: 24.74
• 52-week high: Rs 1,757.80
• Market Cap: 11,75,636.39 crore
• ROE: 16.73%

Share Price Movement

After the result announcement on Monday, HDFC shares opened a percent higher on Tuesday morning. The share price has been going through a time correction wherein the price has not moved much despite the bank reporting growth in the topline and bottomline. 

In 2023, the bank has fallen by 4,50. In the 5-year time frame, the bank has delivered 58.12%, which is much lower than the 5-year historical returns.

How has HDFC Bank performed in Q2FY24?

Below are key numbers related to HDFC Bank's results for the September 2023 quarter:

Revenue: HDFC Bank reported net revenue of Rs 66,317 crore for Q2FY24, a growth of 114%. In the year-ago period, the bank reported a net revenue of Rs 30,871 crore. Please note that the sequential or YoY comparison is not ideal as it is the first quarter of the merger, so the numbers are not right to compare.

Net Interest Income: Net interest income (NII) measures the difference between the interest income generated from loans, investments, and other interest-earning assets and the interest expenses incurred on deposits, borrowings, and other interest-bearing liabilities. It reflects the bank's ability to effectively manage its interest rate risk and generate profits from its interest-related operations. A higher net interest income indicates that the bank is earning more from its interest-earning assets than it is paying on its interest-bearing liabilities, which is a positive sign for its profitability and overall financial health.

The NII for HDFC Bank for the September quarter was Rs 27,385 crore, a jump of 30.3%. In the year-ago period, the net interest income was Rs 21,021 crore. After absorbing debt-funded costs for additional liquidity and merger management, the reported NIM for the quarter is 3.4% on total assets and 3.6% on interest-earning assets.

Other income: It includes the non-interest income, and it was Rs 10,708 crore. In the year-ago period, it was Rs 7,596 crore. Other income has four components - Fees and commissions stood at Rs 6936 crore. Foreign exchange and derivative revenue were reported at Rs 1221 crore, net trading and mark-to-market gains of Rs 1041 crore, and miscellaneous income of Rs 1510 crore.

Profits: The bank reported a net profit of Rs 16,811 crore for Q2FY24, a jump of 51.1% from the year-ago period. Earning Per Share (EPS) for the September quarter was Rs 22.2, and book value per share was Rs 552.5.

Deposits: Total deposits grew by 1.1 lakh crore during the merger. The bank reported a total deposit of Rs 21.73 lakh crore. CASA deposits increased by 7.6%, with savings account deposits at Rs 5.70 lakh crore and current account deposits at Rs 2.48 lakh crore. 

The Time deposits saw exceptional growth numbers. It grew to Rs 13.55 lakh crore with a 48.3% increase. The overall CASA deposits comprised 37.6% of total deposits at the end of the September quarter.

Asset Quality: The HDFC Bank reported Gross non-performing assets (NPAs) at 1.34% of gross advances for Q2FY24, as against 1.17% in Q1FY24. As per management, the spike in NPA was largely because of accounting requirements. As per norms, if an account is restructured, even if it performs, it gets tagged as an NPA. Of the 1.34% gross NPA ratio, about 0.22% was owing to such requirements.

How have HDFC Bank subsidiaries performed in Q2FY24?

HDFC Securities Limited (HSL) is amongst the leading retail broking firms in India. At the end of the September quarter, the Bank held a 95.5% stake in HSL. For the quarter ended September 30, HSL's total revenue was at Rs 603 crore, as against Rs 468 crore in the year-ago period. Profit after tax for the quarter was Rs 214 crore, as against Rs 191 crore for the quarter ended September 30, 2022.

HDB Financial Services Limited (HDBFSL) is a non-deposit-taking non-banking finance company (NBFC) offering a wide range of loans and asset finance products to different customer segments. As of September 30, 2023, the Bank held a 94.8% stake in HDBFSL. For Q2FY24, HDBFSL's net revenue was at Rs 2,357 crore as against Rs 2,201 crore for the quarter ended September 30, 2022, a growth of 7.1%. Profit after tax for the quarter ended September 30, 2023, was Rs 601 crore compared to Rs 471 crore for the quarter ended September 30, 2022, a growth of 27.5%.