HDFC Bank profit rises 4.7% as lending margins narrow

HDFC Bank’s second-quarter standalone net profit rose 4.7% to ₹19,510 crore from ₹18,640 crore a year earlier, Economic Times Markets reported on October 18. Higher lending income and an expanding loan book supported earnings, while pressure on margins and rising bond yields partly offset faster loan and deposit growth.

Net interest income—the difference between interest earned and interest paid—rose 9.7% year on year to ₹34,620 crore. That increase outpaced profit growth, with softer asset yields weighing on the profitability of the lender’s core business.

Business growth meets a narrower margin

Net interest margin eased to 3.16% from around 3.27% a year earlier, a decline of approximately 11 basis points. Return on assets also moderated to 1.78%. The figures distinguish growth in the volume of lending income from the margin earned on the bank’s assets.

Outgoing chief executive Sashidhar Jagdishan pointed to underlying business momentum, particularly in retail banking and micro, small and medium enterprises, during a post-earnings call.

Leadership handover expected this month

The bank is expected to welcome a new chief executive in October, bringing a prolonged period of succession uncertainty to an end, according to the report.

The report also put the decline in HDFC Bank’s market capitalisation over the past year at 27%, attributing much of it to uncertainty over leadership succession. That explanation represents the outlet’s assessment of the share-market backdrop, rather than an independently established cause of the decline.