India’s biggest private bank, HDFC Bank, reported a stable set of Q4 numbers on 15 April. The bank, which makes up nearly 8% of the NIFTY 50 index, recorded ₹12,047 crore net profit for the quarter ending March 2023, an almost 20% year-on-year (YoY) rise. The company’s total income grew 31% year-on-year to ₹53,851 crores, while the Net Interest Income (NII), a vital criterion for banks, increased by nearly 24% year-on-year to ₹23,352 crores

Neat top-line performance

HDFC results were stable across the board. The country’s biggest private lender saw its net revenue grow by a healthy 21% YoY to ₹32,083.0 crore for the quarter, as against ₹26,509.8 crores for Q4 FY22. The NII saw healthy growth, with the core net interest margin coming in at 4.1 % on total assets and 4.3% based on interest-earning assets.

Fewer provisions

HDFC Bank’s share price may also react positively in the coming week, thanks to a sharp drop in provisions and contingencies. It dropped dramatically to ₹2,685.4 crores as against ₹3,312.4 crores in Q4 FY22.

Coming to the Pre-provision Operating Profit (PPOP), the figure came in at ₹18,620.9 crores in Q4FY23. Excluding net trading and mark-to-market income, PPOP witnessed a growth of 14.4% in Q4 FY23 compared to the same quarter a year ago.

Improved asset quality

A decline in NPA (Non-performing Assets) could be the other key factor dictating the course of HDFC Bank’s share price on the NSE (National Stock Exchange). The lender’s gross NPA declined to 1.12% of gross advances in Q4FY23. It was 1.23% in Q3FY23 and 1.17% in Q4FY22. Net NPAs were at 0.27% of net advances as of 31 March 2023.

Closing note—A solid quarter

HDFC Bank’s results demonstrate their aggressive strategy and bode well for the entire financial sector. NPAs dropping also shows the Indian economy is holding up well, and demand is certainly there, with domestic retail loans growing 21%, commercial and rural banking loans 30%, and corporate and other wholesale loans 12.6%, respectively.