HDFC Bank Ltd. reported an increase in net profit for the fiscal second quarter of 2024. The lender's net profit increased 50.6% year on year to Rs 15,976 crore, up from Rs 10,605 crore the previous year. It topped the Rs 14,120 crore forecast from Bloomberg.

This is the lender's first quarterly profit after the $40 billion mega-merger with HDFC Ltd. went into force on July 1. As a result, the figures are not directly comparable. The bank's net interest income, or core revenue, increased 30.2% year on year to Rs 27,385 crore in the third quarter. Year on year, other income climbed 41% to Rs 10,707 crore.

The lender's net interest margin was 3.4% as of September 30, down from 4.1% as of June 30. According to Srinivasan Vaidyanathan, chief financial officer of HDFC Bank, the drop was mostly caused by HDFC Ltd.'s debt financing of liquidity prior to the merger.

"Some of this debt funding will be repaid over time, and the liquidity will be replaced by retail deposits." NIM will rise gradually as these adjustments take effect, according to Vaidyanathan.

The lender's asset quality deteriorated, with the gross non-performing asset ratio jumping 17 basis points sequentially to 1.34% as of September 30. Net NPA ratio increased by 5 basis points quarter on quarter to 0.35%.

According to Vaidyanathan, around 22 basis points worth of loans are genuinely standard and performing but labeled as NPA due to technical reasons such as restructuring.

In Q2, gross advances climbed by 57.7% year on year to Rs 23.5 lakh crore. Domestic retail loans increased 112% year on year, while wholesale loans increased 8%. The commercial and rural loan portfolio increased by 30%.

"Historically, we have grown at a 400 basis point premium to the system credit growth rate." "Our goal is to continue growing at a rate that is advantageous to the system," Vaidyanathan added.