India’s largest private lender HDFC Bank on Monday reported a 50% year-on-year rise in net profit to ₹15,976 crore for the quarter ended September, beating analysts’ estimates.

Net interest income (NII) or core income rose 30% year-on-year to ₹27,385 crore in the second quarter compared to ₹21,021 crore for the quarter ended September 30, 2022. The net interest margin was 3.4% in the second quarter.

“Core net interest margin for the quarter was 3.65% of total assets and 3.85% of interest income assets. After deducting leveraged costs for additional liquidity and merger management, net interest margin (NIM) for the quarter was 3.4% total assets,” the lender said in a stock exchange filing.

Other income for the quarter stood at ₹10,708 crore as compared to ₹7,596 crore in the year-ago period.

Provisions for the quarter fell to ₹2,904 crore from ₹3,240 crore a year ago.

The share of gross non-performing assets in total loans was 1.34% as of September 30, compared to 1.23% a year ago. The net non-performing assets ratio was 0.35% as of September 30, 2023, compared to 0.33% a year ago.

For the half-year ended September 30, the private lender earned a total income of ₹1.36 crore as compared to ₹87,742 crore in the corresponding period last year.

This is HDFC Bank’s first quarterly profit since its merger with HDFC Ltd came into effect on July 1.

Total deposits witnessed healthy growth of around ₹1.1 Lakh Crore in the post-merger quarter and stood at ₹21,72,858 Crore as on September 30, 2023, up 29.8% over September 30, 2022.

CASA deposits increased by 7.6% with savings account deposits at ₹5,69,956 crore and current account deposits at ₹2,47,749 crore.

Operating expenses stood at ₹15,399 crore in the quarter, up 37.2% from ₹11,225 crore in the corresponding quarter last year.

Shares of HDFC Bank closed 0.2% lower ahead of the earnings announcement.

Last month, foreign brokerage firm Nomura downgraded HDFC Bank’s rating to “Neutral” from “Buy” after the merged entity disclosed opening balance sheet details as well as other details on the merged financials. “A downward adjustment in the incoming net assets of HDFC Ltd (primarily due to IGAAP accounting and provision harmonization) amounts to a BVPS (book value per share) cut of INR 23/share for the merged entity,” Nomura said, adding this net interest margin Bank could face “pressure” in next two to three quarters.

In September, the Reserve Bank of India (RBI) approved the reappointment of Sashidhar Jagdishan as Managing Director and Chief Executive Officer of HDFC Bank for the next three years. HDFC Bank merged with its parent Housing Development Finance Corporation (HDFC) in July 2023, forming India’s largest private bank. Jagdishan’s second term as MD and CEO of HDFC Bank begins on October 27, 2023.