India's largest private lender HDFC Bank on Monday reported a 50% year-on-year rise in net profit for the quarter ended September to ₹15,976 crore, beating analyst estimates.

Net interest income (NII), or core income, rose 30% year-on-year to ₹27,385 crore in the second quarter from ₹21,021 crore for the quarter ended September 30, 2022. Net interest margin stood at 3.4% during the second quarter.

"Core net interest margin for the quarter was 3.65% on total assets, and 3.85% on interest earnings assets. After absorbing debt-funded costs for additional liquidity and merger management, the net interest margin (NIM) for the quarter was 3.4% on total assets," the lender says in a stock exchange filing.

Other income for the quarter was ₹10,708 crore compared with ₹7,596 crore in the year-ago period.

Provisions for the quarter declined to ₹2,904 crore from ₹3,240 crore a year ago.

Gross non-performing assets as a percentage of total loans was 1.34% as of September 30 compared with 1.23% a year ago. The net non-performing assets ratio was 0.35% as of September 30, 2023, compared with 0.33% a year ago.

For the half year ended September 30, the private lender earned a total income of ₹1.36 lakh crore as against ₹87,742 crore in the corresponding period of the previous year.

This is the first quarterly earnings by HDFC Bank after its merger with HDFC Ltd came into effect on July 1.

Total deposits showed a healthy growth of around ₹1.1 lakh crore during the quarter post-merger, and were at ₹21,72,858 crore as of September 30, 2023, an increase of 29.8% over September 30, 2022.

CASA deposits grew by 7.6% with savings account deposits at ₹5,69,956 crore and current account deposits at ₹2,47,749 crore.

Operating expenses during the quarter were ₹15,399 crore, an increase of 37.2% over ₹11,225 crore during the corresponding quarter of the previous year.

Shares of HDFC Bank closed 0.2% lower ahead of the earnings announcement.

Last month, foreign brokerage Nomura downgraded HDFC Bank's rating to "neutral" from "buy" earlier as the merged entity disclosed details regarding the opening balance sheet, along with other details on the merged financials. "Downward adjustment to the incoming net worth of HDFC Ltd (largely due to IGAAP accounting and provisioning harmonisation) amounts to a BVPS (book value per share) cut of INR23/share for the merged entity," Nomura said, adding that net interest margin of the bank could see 'pressure' over the next two-three quarters.

In September, the Reserve Bank of India (RBI) approved the reappointment of Sashidhar Jagdishan as the Managing Director and Chief Executive Officer of HDFC Bank for the next three years. HDFC Bank merged with its parent company Housing Development Finance Corporation (HDFC) in July 2023 to form India's largest private bank. Jagdishan's second stint as HDFC Bank MD and CEO will start on October 27, 2023.

HDFC Bank NII

HDFC Bank Q2 results: Profit jumps 50% to ₹15,976 cr