Q2 2024 Highlights: How Major Indian Banks Like HDFC and SBI Are Thriving
ICICI, PNB and various other Indian banks have delivered satisfactory growth in net profit for the quarter ending September 2023 (Q2 FY24). Growth was mostly due to positive growth in net interest income (NII). NII is the difference between interest earned and interest paid by the bank, and it had been the essential element that ensured profits during the period.
This performance marks the strength of banks in the banking sector, amid always changing economic conditions. The ability of banks to always maximize their interest margins and the optimality of their operating efficiency will help them utilize their growth opportunities within the financial landscape to enhance overall performance for the next couple of quarters. In light of this, based on the performance of these top Indian banks for Q2 2024, this article reviews the health, strategic initiatives, and market outlook of the aforementioned banks.
1. HDFC Bank
HDFC Bank, India’s largest lender, reported ₹16,820 crore in its net profit for Q2 FY25, 5.3% above that of Q2 FY24. Growth mainly came in through NII and lower provisions, aside from robust deposit mobilization.
Financial Health
The bank’s NII was ₹30,110 crore, increasing by 10% YoY with support from growth in advances. The gross non-performing assets (GNPA) ratio increased marginally at 1.36% as compared to 1.33% in Q1 FY25, and there has been a marginal decline in asset quality.
Strategic Initiatives
HDFC Bank mobilised deposits worth ₹1.2 trillion in Q2 FY25, with a total deposit base of ₹25 trillion, up 15% YoY. The bank is looking to increase its market share in deposits and has plans to further enhance the loan assignment strategy.
Market Outlook
The credit-deposit ratio is around 100%, and HDFC Bank follows a balanced growth strategy. Retail loans are significantly growing, and the bank would have sustainable growth in the competitive lending space.
2. State Bank of India (SBI)
State Bank of India (SBI) reported Q2 FY24 with a net profit of ₹14,330 crore marking an 8% growth over the last year. It is because of the strong net interest income, besides improvement in asset quality.
Financial Health
SBI’s NII had gone up by 12.3% at ₹39,500 crore compared with last year’s number. The provisions reduced drastically to ₹115.3 crore from ₹3,039 crore YoY that shows effective asset management and risk mitigation strategies were at work.
Strategic Initiatives
It could offer a YoY credit growth of 12.39% backed by 22.75% growth in advances to SMEs and 15.68% growth in retail personal loans. This points out that the bank is looking for diversification of its loan portfolio.
Market Perspective
CASAs stand at 41.88%, and the total deposit growth was recorded at 11.91% YoY, thereby supporting SBI’s growth further. Better asset quality along with credit demand being robust, shows that there is a rosy prospect for the banking sector.
3. ICICI Bank
ICICI Bank is one of India’s premier private sector banks, with over 6,600 branches and 16,100 ATMs. The bank offers an entire gamut of banking products and services to individuals as well as business groups.
Financial Performance
For Q2 FY25, ICICI Bank registered a net profit of ₹11,745.88 crore, 14.47% higher than the last year. Total income improved by 17.24% at ₹47,714.04 crore, which is a great financial performance.
Strategic Programs
The bank focuses on fee-based income, retail loan portfolio growth, and asset quality. The investment in technology will streamline the process and expand the reach to customers through digital channels.
Market Outlook
High capital adequacy ratios and low non-performing assets position ICICI Bank well for growth in the future. The market sentiment also captures its strategic thrust and the ability to respond to the challenges.
4. Axis Bank
Axis Bank reported ₹6,917.57 crore as net profit for Q2 FY25 with a year-on-year growth of 18 per cent. The growth is attributed to healthy credit demand and a significant surge in net interest income.
Financial Health
Net interest income grew 10% YoY to ₹13,483.2 crore. The net interest margin declined to 4%, versus 4.11% YOY mainly due to a one-time tax gain recognized in the last quarter. Gross nonperforming assets declined to 1.44%, compared with 1.73% in a year-ago period and more recently reflecting better asset quality.
Strategic Initiatives
Axis Bank saw net loan growth at 11% and total deposits grew 14% in the quarter. The credit card book was up 22%, and personal loans grew 23%. All these suggest that the bank is focused on building up its retail lending portfolio.
Market Outlook
With normalized CASA ratio and overall deposit growth, Axis Bank is basking in strong growth. Cautious provisioning in the face of tough conditions and strict asset quality handling speaks more about the cautious but optimistic view regarding the growth in quarters ahead.
5. YES Bank
YES Bank declared net profit of ₹553 crore for Q2 FY25 against ₹225 crore in Q2 FY24. Such good performance helped the stock go up by nearly 10%.
Financial Health
The NII saw a year-on-year growth of 14.3% at ₹2,200 crore as against ₹1,925.1 crore posted for the quarter ended July-September 2017. But it expanded 2.4% compared with a year ago, as well as sequentially. Meanwhile, the GNPA grew to 1.6%, a positive sign towards asset quality.
Strategic Initiatives
SME and midcorporate growth are satisfactory. Resumption in the growth of the corporate segment. In PSL: shortcomings at zero all through Q2 of FY25, retail CASA account opening stands at 3.64 lakh as of Q2 of FY25.
Market Outlook
With total deposits growing to ₹2.77 lakh crore, up 18.3% YoY, and CASA ratio improving to 32.0%, YES Bank is well placed for further growth. The current and savings account balances continue to rise, indicating a trend of increasing customer engagement and liquidity, which bodes well for the stability of operations going forward.
6. Punjab National Bank
Punjab National Bank is a state-owned bank in India with 10,159 domestic branches and 2 international branches. Punjab National Bank offers banking and financial services to numerous individual and institutional clients.
Financial Performance
PNB delivered strong net profits of ₹4,303 crore in Q2 FY25, an improvement of 145% as compared with ₹1,756 crore delivered in Q2 FY24. PNB’s net interest income improved year-over-year by 5.99% to ₹10,517 crore.
Strategic Initiatives
PNB has focused on its asset quality improvement, which manifests in the gross non-performing asset (GNPA) ratio, which declined to 4.48%. Its CASA deposits have grown at 3.4% y-o-y.
Market Outlook
The bank’s retail credit grew by 14.6% y-o-y, with robust support from the core retail advance growth at 19%. Having an excellent financial platform, PNB is well-positioned to support the growth momentum under the aggressive banking industry scenario.
7. Indian Bank
Indian Bank registered a net profit of ₹2,707 crore in Q2 FY25 as compared with ₹1,998 crore during the same quarter of last fiscal, which had risen by 36%.
Financial Performance
Net interest income increased 8% YoY to ₹6,194 crore versus ₹5,741 crore. Operating profit grew 10% to ₹4,728 crore, primarily driven by higher interest income and reduced provisions. Provisions fell 29% to ₹1,098 crore.
Strategic Initiatives
All credit segments grew nearly in the double-digit range, making business expansion as a whole increase. Domestic advances recorded a growth of 12 per cent to ₹5,13,318 crore from ₹4,58,046 crore. Growth was reflected in retail, agriculture and MSME loans, signalling a direction of the bank’s lending portfolio.
Market Outlook
Comparative asset quality improved, GNPA at 3.48% against last year’s 4.97%, net NPA ratio improved to 0.27%. The total business at ₹12.44 lakh crore grew by 10%. Such growth and profitability are sustainable for the Indian Bank.
The following are the macroeconomic factors that helped positively during the Q2 period of 2024, for the Indian banks:
- Economic Recovery: The Indian economy is slowly moving back onto the growth path, and credit demand is on an uptrend as it picks up across segments.
- Government Initiatives: Multiple government initiatives such as liquidity-enhancing schemes and initiatives for small businesses have boosted banking activities.
- Digital Banking Trends: Change in the psyche of customers has motivated digital banking, thereby making banks improve operational efficiency and save costs by the day.
Sustainability Issues
While growth indicators are very positive for Indian banks, there exist other challenges that are likely to affect future performance:
Global Economic Uncertainty: Markets are unstable, and perhaps geopolitical tensions create uncertainty towards future economic stability.
Regulatory Changes: All regulatory changes being implemented may cause operational change and compliance for banks in the future.
Competition from Fintech: Fintech companies increase competition for old banks by quick innovation and new products.
Conclusion
The Q2 FY24 results of the Indian leading banks present excellent recovery and resilience in the banking sector, primarily fuelled by an increase in net interest income and an improvement in asset quality. The significant year-on-year growth in profits for HDFC Bank, SBI, ICICI Bank, Axis Bank, YES Bank, Punjab National Bank, and Indian Bank shows all of this is the result of initiatives initiated through strategic efforts and strong operational efficiencies. As the economy continues to rebound, these institutions are well-positioned to seize growth opportunities in an evolving financial landscape.
Challenges still lie in the way of future performance which comprises economic uncertainty, global changes, and changes in regulatory policies. Competition also evolves due to the emergence of fintech players that change the landscape by posing strong competition against the banks, hence compelling the old bank structure to transform and evolve with newer innovations. Focusing on engagement with customers and increasing the efficiency of operations can allow Indian banks to counter challenges while building upon market dominance.
