HDFC Bank’s costs soar on new branches
2 min read . Updated: 16 Apr 2023, 10:36 PM IST
PremiumThe private sector lender’s operating expense was up 32% from a year earlier to ₹13,462.1 crore, against ₹10,152.8 crore in the corresponding period of the previous year.
MUMBAI : HDFC Bank witnessed a steep rise in operating cost in the fourth quarter owing to branch expansion and a rise in employee benefit expenses.
The private sector lender’s operating expense was up 32% from a year earlier to ₹13,462.1 crore, against ₹10,152.8 crore in the corresponding period of the previous year. Its cost-to-income ratio stood at 42% for the quarter. The bank opened 1,479 new branches in FY23, including 638 branches in the fourth quarter alone.
“Overall operating expense was up 8% QoQ, owing to large branch expansion and ESOP expense of ₹3 billion. The bank has opened 1,479 branches in FY23, and aims to grow at the same pace next year as well. Therefore, opex ratios may remain elevated at nearly 42% for the next few quarters,’ said Dolat Analysis and Research Themes in its report.
Higher operating expense led to the moderation in pre-provision operating profit by 2.1% on a sequential basis but it grew by 13.8% from a year ago period to ₹18,620.9 crore at the end of March. The bank’s net profit jumped 19.8% from a year ago to ₹12,047.5 crore at the end of the March quarter compared to ₹10,055.2 crore in the corresponding period of last year. Net profit at the end of Q3 was at ₹12,260 crore
On the revenue front, HDFC Bank reported 23.7% net interest income growth (the difference between interest earned and interest expended) in Q4 FY 23 of ₹23,351.8 crore, from ₹18,872.7 crore in the quarter ended 31 March 2022.
Its core net interest margin stood at 4.1 % on total assets.
Provisions and contingencies however dropped sharply to ₹2,685.4 crore at the end of the March quarter, as against ₹3,312.4 crore in Q4 FY22.
The bank’s gross non-performing assets (NPA) declined to 1.12% of gross advances in the fourth quarter, as against 1.23% in Q3FY23 and 1.17% in Q4FY22. Its net NPAs were at 0.27% of the net advances as of 31 March 2023.
Its total deposits were up by 20.8% from a year earlier to ₹18.83 trillion as of 31 March, while its loan book grew 16.9% year-on -year and 6% sequentially, with no signs of demand slowdown, the bank’s management said.