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Despite the dip in profit, the company demonstrated a strong operational performance. Net Interest Income (NII) surged 18% year-on-year to Rs 2,092 crore, driven by healthy loan growth and an overall increase in interest-earning assets. The net interest margin also saw a slight improvement, reaching 7.7% during the quarter.
Total net income for the quarter climbed 14% YoY to Rs 2,726 crore, with pre-provisioning operating profit rising 17% YoY to Rs 1,402 crore.
Total gross loans stood at Rs 1.09 lakh crore as of June 30, marking a 14% rise from Rs 95,629 crore a year earlier.
Asset under management (AUM) rose by 15% to Rs 1.09 lakh crore, indicating sustained credit demand across segments.
However, provisions saw a sharp rise, with loan losses and provisions amounting to Rs 670 crore, up from Rs 412 crore a year ago. This led to a dip in profit before tax, which came in at Rs 733 crore, down from Rs 784 crore in Q1FY25.Asset quality weakened during the quarter, with gross stage 3 loans rising to 2.56% of total advances, compared to 1.93% a year ago.Net stage 3 loans also climbed to 1.11%, from 0.77%. Provision coverage ratio on stage 3 assets fell to 56.70%, compared to 60.24% in Q1FY25.
Also read: HDB Financial Q1 Results: PAT falls 2% to Rs 568 crore; NII rises 18% on healthy loan growth
Despite pressure on bottom-line profitability, the bank’s operational metrics remained strong, driven by double-digit growth in lending and income. However, rising provisions and deterioration in asset quality remain key monitorables for the coming quarters.
On Tuesday, HDB Financial stock fell 0.3% to settle at Rs 841 on NSE.
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