HDFC Bank (NSE:HDFCBANK, BOM:500180) reported a 5% increase in net profit for the fiscal first quarter ended June 30 to 190.60 billion rupees from 181.55 billion rupees a year earlier.
Earnings per share rose to 12.35 rupees from 11.79 rupees, according to filings with the Indian bourses on Saturday.
Net revenue for the quarter, however, shrank to 463.6 billion rupees from 531.7 billion rupees. The year-ago figure included 91.3 billion rupees in transaction gains from the IPO of its subsidiary, HDB Financial Services (NSE:HDBFS, BOM:544429), HDFC said.
Net interest income in the latest reporting period edged up 6.7% to 335.3 billion rupees. Net interest margin shrank to 3.26% on total assets from 3.4% a year prior.
On the earnings call, CEO Sashidhar Jagdishan said the lender faced "certain challenges over the last four months."
CFO Srinivasan Vaidyanathan told analysts that the bank does not expect net interest margins to improve quickly, citing the country's liquidity scenario and the elevated costs of non-retail deposits.
"Non-retail deposit costs have been elevated. And similarly, the borrowing mix has not come off yet. We still remain at about 11%. That continues to be a space that we keep watching. But again, it doesn't change in the short term and doesn't change in a hurry," Vaidyanathan said.
During the call, Deputy Managing Director Kaizad Bharucha said the bank had disbursed close to 140 billion rupees under the government's Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 scheme as of June 30.
"I believe that's amongst the highest in terms of the participating banks because of the spread of customers and the quality of the portfolio that we have out over there," Bharucha said.
