HDFC Bank sees margins turning upwards from next quarter, says Sashidhar Jagdishan

HDFC Bank expects its margins to recover from next quarter as the interest rate trajectory turns upwards, outgoing managing director and chief executive officer Sashidhar Jagdishan said, offering a positive outlook after the lender reported its lowest-ever net interest margin in the September quarter.

Jagdishan told CNBC-TV18 that margins had come under pressure during the quarter but expected the trend to change as the interest rate trajectory turned upwards. With a large part of the bank’s loan book linked to external benchmarks, he expects net interest margins (NIMs) to move higher.

The comments come as pressure on margins remains a key concern for investors, even as the bank reported healthy growth in its core lending business.

HDFC Bank’s NIM declined to 3.16% in the September quarter, compared with 3.26% in the June quarter.

During the earnings call, Jagdishan said the bank’s topline growth had been healthy and expressed confidence in the resilience of its asset quality, which he expects to remain strong.

HDFC Bank reported a net profit of ₹19,510 crore for the September quarter, up 4.7% year-on-year and in line with estimates. Net interest income (NII), the difference between interest earned and interest expended, rose 9.7% year-on-year to ₹34,620 crore. Deposits grew 18.8%, while the gross non-performing asset ratio stood at 1.11%.

The bank’s treasury trading income, however, fell 67.4%

year-on-year to ₹780 crore, compared with ₹2,390 crore in the year-ago quarter. Excluding treasury trading gains, net profit grew 12.6% year-on-year, against reported growth of 4.7%.

Jagdishan backs continuity as Anup Bagchi prepares to take charge

With Anup Bagchi set to take over as managing director and chief executive officer after Jagdishan’s term ends on October 26, the outgoing chief highlighted the depth of the bank’s leadership and the importance of institutional continuity.

Speaking to CNBC-TV18, Jagdishan said HDFC Bank was not dependent on any one individual, noting that experienced leaders, including Kaizad Bharucha and Srinivasan Vaidyanathan, had played important roles. He expressed confidence that the depth of the management team would help preserve the institution’s continuity and ethos.

Jagdishan described Bagchi as a seasoned financial services professional with 34 years of experience across banking and insurance. He said the incoming chief was well placed to lead a team of capable leaders and wished him well ahead of the transition.

Bagchi, in his comments to CNBC-TV18, highlighted the strength of the institution and its team, saying the organisation remained committed to the bank. He added that much of the clean-up work was behind the lender, although some more work remained.