The shares of HDFC Bank fell more than seven percent on Wednesday, a day after the company released its Q3 results.
Just a day after its quarterly results were posted, the shares of HDFC Bank fell over 7 percent as the markets opened on Wednesday. The top private lender reported stagnant margins for a second consecutive quarter in October-December.
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At 9:15 am on January 17, HDFC Bank share prices were recorded at ₹1583.85 apiece, falling seven percent from its previous closing rate. On Tuesday, HDFC shared had closed at ₹1,678.95.
Not only on the Indian stock market, but the US-listed shares of HDFC Bank fell 6.71 per cent on the New York Stock Exchange (NYSE) after the Q3 results, caused by muted margins in the Q3 earnings report.
HDFC Bank reported a standalone net profit of 163.73 billion rupees ($1.97 billion) for the quarter ended December, beating analysts’ expectations of 156.51 billion rupees, per LSEG data. However, NIM remained stagnant at 3.4%, compared with the previous quarter.
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The net interest income for HDFC Bank in the December 2023 quarter rose to ₹28,471 from ₹27,385 crore in the previous quarter. Meanwhile, the gross non-performing assets (NPAs) were reported at 1.26 per cent in Q3 of FY24, marginally up from last quarter’s reports.
Kotak Institutional Equities said in a note, “Operating profit growth drivers appear to be less sustainable and the bank reported higher provisions.” The underlying deposit growth environment has deteriorated while the drivers for net interest margin expansion appear to be slower than expected, they added.
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HDFC Bank Q3 result highlights
On Tuesday, HDFC Bank released its Q3 results showing muted margins, with a net interest income rise of just 4 percent for the quarter ending on December 2023. This resulted into not only a drop on the Indian share price, but also a steep decline of 6.71 percent on the New York Stock Exchange.
HDFC, which is India’s largest private sector bank, also reported net interest margin of 3.4%, lower than analysts’ estimates of 3.56%. Additionally, HDFC reported a 2.5 percent sequential growth in Q3, putting the net profits at ₹16,372.54 crore.
The liquidity in the system has become negative for the first time since 1Q 2020 due to the central bank’s constraints “so we do need deposits to be kicking in for the loans to be operating,” Chief Financial Officer Srinivasan Vaidyanathan said in a call with analysts late Tuesday.
(With inputs from Bloomberg)
