Thu Jan 23 11:52:50 UTC 2025: ## HDFC Bank Reports Increased Profit Despite Rising Bad Loans

**Mumbai, India** – HDFC Bank, India’s largest private sector lender, announced a 2.3% increase in net income for the third quarter of fiscal year 2024-25, reaching ₹16,735.50 crore. While this met market expectations, the bank also reported a rise in gross bad loans to 1.42%, exceeding analyst forecasts of 1.37%.

The increase in net income comes on the back of a 7.7% growth in core net interest income (₹30,650 crore), driven by stable net interest margins and 6.6% loan growth. Non-interest income also saw a 2.8% increase, reaching ₹11,450 crore, thanks to strong growth in fees and commissions. Total income rose to ₹87,460 crore, compared to ₹81,720 crore in the same period last year.

However, the bank is grappling with rising funding costs and is actively managing its loan portfolio. HDFC Bank is aiming to reduce its credit-deposit ratio, currently at 98%, to pre-merger levels (85-90%) within the next two years. To achieve this, the bank securitised approximately ₹2.16 billion in retail loans and plans to continue this strategy.

CFO Srinivas Vaidyanathan stated that the bank prioritizes customer relationships but isn’t necessarily focused on holding all loans on its balance sheet. The rise in bad loans and a 17% quarter-on-quarter increase in provisions reflect the challenges faced by Indian lenders amidst slowing economic growth and weakening urban consumption.

Despite the increase in bad loans, HDFC Bank shares closed up 1.42% at ₹1,665.05 on the BSE, outperforming the market’s overall performance. The broader market also saw gains, with the BSE Sensex and NSE Nifty indices rising 0.64% and 0.45% respectively.

Read More