Wed Jan 22 17:07:13 UTC 2025: ## HDFC Bank Reports Slight Profit Increase Despite Rising Bad Loans

**Mumbai, India** – HDFC Bank, India’s largest private sector lender, announced its third-quarter (Q3) results on Wednesday, reporting a net profit slightly above analyst expectations despite a rise in gross bad loans. The bank’s net income for the quarter ending December 31, 2024, reached ₹167.4 billion ($1.9 billion), a 2.3% increase year-on-year. This figure is marginally higher than the Bloomberg consensus estimate of ₹166.57 billion.

However, the bank’s gross bad loans increased to 1.42%, exceeding analyst projections of 1.37%. This rise, along with a 17% sequential increase in provisions for bad loans (reaching ₹31.54 billion), reflects the challenges faced by Indian lenders amidst slowing economic growth and weakening urban consumption. The bank’s consolidated net profit for the quarter was ₹17,656.61 crore, compared to ₹17,258.87 crore in the same quarter of the previous year. Note that year-on-year comparisons are complicated by the bank’s merger with Housing Development Finance Corp in July 2023.

HDFC Bank’s net interest income (NII) showed a more positive trend, rising 2% quarter-on-quarter to ₹306.53 billion. Deposit growth slowed to 4.2% compared to the previous quarter’s 5.1%, while loan growth also decelerated to 0.9% from 1.3%. The bank is actively managing its loan-to-deposit ratio, having recently offered retail loans for sale to improve its liquidity position.

Following the announcement, HDFC Bank’s share price initially saw a slight dip but later rose by 1%, closing at ₹1,666.60 on the NSE. Analysts remain divided, with some expressing concerns over the value of new business growth margins, leading to lowered target prices by some brokerages. Others are more optimistic, pointing to the expected improvement in the credit-deposit ratio due to stronger deposit growth compared to credit growth.

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