HDFC Bank Limited Earnings Story for Q2FY23

Financial Results:

HDFC Bank Ltd.’s core net revenue grew by 18.3% for the quarter ended September 30, 2022 from the corresponding quarter a year ago. The total income grew 19% YoY relative to the corresponding quarter a year ago. 

It is evident that part of the increase in profitability stems from the reduction of Provisions & Contingencies amount. That would explain as to why the YoY growth for Operating Profit is 10% whereas the YoY growth for Profit is 22%

HDFC Bank’s Loan Mix is well diversified.

Proportion of CASA Deposit stood at 45%. Net interest income for Q2FY23 grew by 18.9% YoY. Core net interest margin was at 4.1% on total assets, and 4.3% based on interest earning assets. 

Key Ratios:

Financial Metrics	Q2FY23	Q2FY22
Net Interest Margin on Assets	4.1	4.1
Net Interest Income as a % of Net Revenue	73%	70%
Core Cost to Net Revenue	39%	38%
Credit Costs as a % of PPOP	19%	25%
Growth in Advances (YoY)	25.8%	15.5%
Growth in Deposits (YoY)	19%	14.4%
CASA Ratio	45.4%	46.8%
Retail Mix of Deposits	83%	82%
Total GNPA as a ratio of Customer Assets	1.18%	1.28%
Total Provisions as a % of Advances	2.09%	2.20%
Total Provisions as a % of GNPA	171%	163%
Specific PCR	73%	71%

Capital Adequacy:

The Bank’s total Capital Adequacy Ratio (CAR) as per Basel III guidelines for H1FY23 was at 18.0% by Q2FY23 end whereas CAR on Q2FY22 was 20%. 

Tier 1 CAR was at 17.1% on Q2FY23 compared to 18.7% on Q2FY22. 

Asset Quality:

Gross non-performing assets were at 1.23% of gross advances in Q2FY23, as against 1.35% in Q2FY22. Net non-performing assets were at 0.33% of net advances in Q2FY23.