HDFC Bank Q4 Profit Up 7%, Flags Pricing Pressures

Mumbai, Apr 19 (PTI) HDFC Bank on Saturday reported a 7 per cent growth in its consolidated net profit for the March quarter to Rs 18,835 crore, but flagged issues around pricing in home and corporate loan segments which are impacting its loan growth.

On a standalone basis, the largest private sector lender reported a net profit of Rs 17,616 crore for the reporting quarter as against Rs 16,512 crore in the year-ago period.

The net interest income moved up 10.3 per cent to Rs 32,070 crore during the reporting quarter, on a slight expansion in the net interest margin to 3.5 per cent and the gross advances growth coming at 5.4 per cent.

HDFC Bank's chief financial officer Srinivasan Vaidyanathan said that the bank had consciously taken a call to slow down loan growth and focus on the liabilities piece for the fiscal, and added that the deposit growth was over 15 per cent.

This has helped the bank to reduce its credit deposit ratio to 96 per cent in March from 104 per cent in the year-ago period, he told reporters, adding that in FY27, the key number is aimed to be reduced further to the pre-merger levels of 85-90 per cent.

The loan growth in FY25 is lower than the 11 per cent for the banking system, Vaidyanathan said the bank aims to grow the loans at par with the system in FY26 and accelerate on it to outpace the system to gain market share in FY27.

The official, however, said that the bank is facing troubles on the pricing front which is making it stay off some loan proposals.

He specifically mentioned home loans, which forms 30 per cent of the overall Rs 26.43 lakh crore book, pointing out that its disbursements were hit by up to 20 per cent because of the "intense" pricing play by rivals.

The HDFC Bank CFO said that the bank finds offerings priced at 8.1-8.2 per cent as "very low" due to which its disbursements have been impacted.

"For us, our disbursals are down by 19-20 per cent because we are very circumspect on how we are approaching right kind of pricing," he said.

The bank, which reported an under 8 per cent growth on mortgage book in FY25, feels that the demand in lower to middle tier housing has been affected due to inflation consuming up disposable incomes of households over the last one to one and half year, the CFO said.

As a result, the supply is also low in this segment sensitive to the inflation, he said, adding that it is in the upper segments where financiers are grappling with their competitive offerings.

Similarly, in the corporate segment as well, the bank continues to see a pressure on pricing especially from state-run rivals, he said, wondering if profitability is on the minds while lowering the rates.

"We do see that the price is lower than what is expected for this customer segment (corporates). Profits and profitability are not the goal, but growth rate is the goal. This is when you see pricing becoming secondary or third in order of priority," he said.

On the overall loan growth front, he said the opportunity to grow is higher in the retail segment considering the untapped potential and also added that the bank has expanded across 700 districts of the country.

For the reporting quarter, the other income came at Rs 12,030 crore, which was lower because the year-ago period had a lumpsum item in gains from the sale of a subsidiary.

The share of the low-cost current and savings account deposits stood at 34.8 per cent as of March 31, 2025.

From an asset quality perspective, the gross non-performing assets ratio improved to 1.33 per cent in March from 1.42 per cent in December.

Among the subsidiaries, HDB Financial Services reported a PAT of Rs 2,180 crore for the fiscal 2024-25, the life insurance arm's Q4 net grew to Rs 480 crore from Rs 410 crore, and the general insurance arm swung into the black with a Rs 70 crore profit and asset management arm's jumped to Rs 640 crore from Rs 540 crore.

The bank board on Saturday recommended a dividend of Rs 22 per share for the year.

HDFC Bank's overall capital adequacy stood at 19.6 per cent, which is higher than the 18.8 per cent in the year-ago period.