HDFC Bank is, today, India’s biggest lender in the private sector. On January 22, 2025, it released its financial results for the third quarter of the running financial year. The results are a mixed bag of both growth and challenges as along with visible profits, there are subsequent shortcomings. Let’s read further about the results in detail and understand what these mean for the bank’s future.
An Overall Increase in Growth
Though the bank’s profits didn’t cross expectations, it still made some decent ones even amid slower credit demand. It reported a net profit of ₹16,736 crore, making it a satisfactory 2.2% year-on-year increase. Though this increase seems very small and not at all historical, it is still quite significant, given the circumstances. To achieve even this wouldn’t surely have been an easy job but this shows the bank’s ability to rise even amid chaos.
Any bank’s one of many major factors indicating profit is the NII (Net Income Increase). It is calculated by taking out the difference between interest earned on loans and interest paid on deposits. HDFC’s NII for the said quarter came out to be ₹30,690 crore, an 8% year-on-year increase. Very impressive!
Also important to note is that the bank’s overall income was ₹81,719.65 crore in the same quarter last year. This quarter, it reported this income to have risen by 7.02%, reaching ₹87,460.44 crore.
This clearly shows that HDFC saw an influx of customers and gained their trust with its service and right strategy.
A Rising Concern
All’s fair and well until one foul drop pollutes the entire ocean. Something similar happened with HDFC as it found out a depletion in the asset quality. This, they have figured, is because of an increase in the ratio of Gross Non-Performing Assets (GNPA) from 1.36% in the previous quarter to 1.42% now. Now, this difference might seem very small, but it makes a significant difference especially in the banking scene. Their one major GNPA is the non-performing agricultural loans. Had the weather conditions and systems cooperated, the exposure to this segment would have been better.
What step has the bank taken to prevent this from recurring? It has increased its provisions for bad loans and contingencies by 17% sequentially, bringing the total provisioning amount to ₹3,153.85 crore. This, of course, is like playing with profits. But what good is a business if it cannot take risks aimed at bettering the future growth?
The Public’s Unshakeable Trust and Bank’s Efforts to Keep Up
With the announcement of the bank’s Q3 results, we got to see two sides of a leading bank. First is the one we all see and know, the profitable and rising one. But, like any real business, there’s one loophole that just gets in the way. In this case, it is the NPAs. However, this does not stop the public from continuing to have faith in this reputed bank. The bank’s total deposits grew by 4.2% sequentially, reaching a shocking ₹24.53 trillion. Not just this, the bank’s gross advances also grew to ₹25.43 trillion, a 0.9% increase compared to the previous quarter. Even the investors continued to show their trust, with the shares being closed 1.4% higher on the announcement day.
The bank also maintained a proactive approach and did what was necessary without any delay to avoid future risks. It underscores the bank’s ability to identify the pain points and come up with an effective solution in no time.
However, critical exceptions are always there and they haven’t isolated this scenario either. While some think that the bank’s performance is commendable, others worry about the slower rate of growth.
Conclusion
This is a real world and its systems are ought to meet with challenges. These challenges are not important, but what matters is how the system deals with them and comes out brighter than ever. HDFC Bank’s Q3 results have met with mixed reactions. Maintaining growth amid a falling system is noteworthy but also worrisome. Nonetheless, the bank has identified the weakling and surely, will be able to up the game in the next quarter.
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