HDFC Bank's September‑quarter earnings showed a ₹19,510 crore net profit, a modest 4.7% rise, while its net interest income climbed 9.7% to ₹34,620 crore. The shares of the bank slipped 1.2% on NSE, reflecting cautious sentiment as the bank’s earnings momentum lags its larger rival.
ICICI Bank, the benchmark competitor, recorded a ₹14,843 crore net profit, up a sharp 20.1% YoY, and its NII grew 17.7% to ₹25,339 crore. The contrast highlights HDFC’s slower earnings acceleration, a concern for investors focused on growth trajectory rather than absolute size.
Margin figures underscore the pressure: HDFC’s net interest margin stood at 3.16% versus ICICI’s 4.18%. For banks of similar scale, the gap signals that HDFC must tighten the cost of funding or raise rates to keep pace.
Deposit composition further explains the margin squeeze. Total deposits rose 18.8% YoY to ₹33.27 lakh crore, yet CASA deposits grew only 10.8% against a 22.8% rise in term deposits. CASA now represents 31.6% of total deposits, below ICICI’s 35.8%, meaning HDFC pays higher funding costs.
The July 2023 merger with HDFC Ltd expanded the balance sheet, amplifying both loan and deposit growth. While cross‑selling opportunities have materialised, the enlarged franchise has forced the bank to secure cheaper funding to maintain profitability.
With Anup Bagchi now at the helm, analysts expect a focus on improving deposit mix and tightening margins. Guidance for the next quarter is pending, but market watchers anticipate that Bagchi’s ICICI experience will drive targeted cost controls and margin improvement over the coming months.