Indias HDFC Bank beats January-March profit forecasts

MUMBAI, April 19 (Reuters) – India’s HDFC Bank beat analysts’ forecasts for January-March profits on Saturday, helped by higher net interest income and improving asset quality.

The country’s biggest private lender posted standalone net profit of 176.16 billion rupees ($2.06 billion) for the financial fourth quarter, up from 167.36 billion rupees in the previous three months and above the analysts’ estimate of 170.27 billion rupees, according to data compiled by LSEG.

Net interest income, the difference between interest earned and paid, rose 4.6% to 320.7 billion rupees, core net interest margin rose to 3.54% from 3.43% on total assets, and to 3.73% from 3.62% on interest-earning assets.

Excluding interest on an income tax refund worth 117 billion rupees, HDFC’s core net interest margin was 3.46% on total assets and 3.65% on interest-earning assets.

The Mumbai-based lender cut its savings interest rates by 25 basis points after three years on hold, following 50 bps of central bank policy rate cuts since February.

The cut is expected to boost HDFC Bank’s margins from the next quarter, analysts say.

HDFC Bank’s merger with parent HDFC in 2023 added a large pool of loans to its portfolio but a much smaller amount of deposits, putting it under pressure to increase the pace of raising deposits or slow loan growth.

Its deposits rose 5.9% from the previous quarter to 27.15 trillion rupees, while gross advances, or loans sanctioned and disbursed, rose around 4%.

HDFC Bank’s asset quality improved, with gross its non-performing assets ratio falling to at 1.33% at the end of March from 1.42% three months earlier.

Shares of HDFC Bank ended 1.5% higher on Thursday, ahead of a market holiday on Friday. ($1 = 85.4290 Indian rupees) (Reporting by Siddhi Nayak; Editing by William Mallard)