HDFC Bank Profit Beats Estimates as Demand for Credit Climbs

HDFC Bank Ltd.’s quarterly profit rose 19%, surpassing estimates and signaling other lenders could also do well amid booming demand for credit and rising interest rates.

(Bloomberg) — HDFC Bank Ltd.’s quarterly profit rose 19%, surpassing estimates and signaling other lenders could also do well amid booming demand for credit and rising interest rates.

Net income increased to 122.6 billion rupees ($1.5 billion) in the third quarter from 103.4 billion rupees a year ago, according to an exchange filing on Saturday. That exceeded the average estimate of 118.2 billion rupees by analysts in a Bloomberg survey. 

HDFC Bank is the first major lender in India to report earnings. Banks in the country are witnessing the decade’s fastest loan growth while higher interest rates are giving a tailwind to lending revenue. Rival Axis Bank Ltd., the Indian firm snapping up Citigroup Inc.’s local consumer operations, is betting the robust demand for credit in one of the world’s fastest-growing economies will continue this year.

Interest income of HDFC Bank rose to 427.1 billion rupees as compared with analyst estimates of 410.1 billion rupees, while deposits grew 20% over the same period, according to the filing.  

Analysts largely expect banks to continue to deliver strong performance in the December quarter, buoyed by the credit growth and a lighter impact from losses on bond portfolios. 

HDFC’s gross bad loans were 1.23%, unchanged from three months earlier. It set aside 28.1 billion rupees as provisions in the quarter, 13% lower than the previous quarter, compared with an estimate for 30.5 billion rupees. Other key figures:

  • Total advances as of Dec. 31 climbed to 15.1 trillion rupees
  • Operating profit rose 13% to 190.2 billion rupees
  • Net interest income grew 25% to 230 billion rupees
  • Interest expense increase 41% to 197.2 billion rupees

 

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