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HDFC Bank (HDB) Reports Higher-than-expected Quarterly Profit

HDFC Bank Limited (NYSE:HDB) is one of the Best Indian Stocks to Buy for Next 5 Years. Reuters highlighted that the company reported higher-than-expected quarterly profit thanks to a surge in interest income from loans and treasury gains, despite an increase in provisions for bad loans. HDFC Bank Limited (NYSE:HDB)’s standalone net profit went up by 12.2% to INR181.55 billion ($2.11 billion) during the April-to-June quarter, above the average analyst forecast of INR172.84 billion, reported Reuters. Its provisions for bad loans increased five-fold to INR144 billion.

A business owner tallying their profits in the back office of a local banking branch.

Reuters, while quoting HDFC Bank Limited (NYSE:HDB)’s exchange filing, noted that most of such provisions were not related to any actual bad loans. These acted as a countercyclical buffer so that the balance sheet becomes more resilient. The lenders in India continue to face higher bad loans in segments like microfinance and unsecured portfolio, prompting them to set aside more funds for potential defaults and to strengthen the balance sheets, noted Reuters.

This firm also added that, while overall bank credit growth witnessed a slowdown in India, HDFC Bank Limited (NYSE:HDB) saw growth of 6.7% for its overall loan book, thanks to the 17.1% increase in loans to small and medium businesses.

Brown Advisors, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:

“HDFC Bank Limited (NYSE:HDB) has shown robust fundamental business drivers, but the shares have relatively underperformed since its merger with former parent HDFC Ltd. This merger enhances HDFC Bank’s long-run business opportunities, particularly mortgages, in the Indian market but comes with short-term sub-optimal funding which we expect to unwind over the next couple of years. With an enhanced competitive position, we feel it unlikely this remains an issue over time. HDFC Bank has also shown good downside protection historically when the credit cycle turns, and the bank’s defensive lending practices allow it to outperform peers. Impressively, management has expanded lending at the right time historically too. We believe these characteristics remain intact.”

Headquartered in Mumbai, India, HDFC Bank Limited (NYSE:HDB) is engaged in providing banking and financial services to individuals and businesses.

While we acknowledge the potential of HDB to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than HDB and that has 100x upside potential, check out our report about this cheapest AI stock.

READ NEXT: 13 Cheap AI Stocks to Buy According to Analysts and 11 Unstoppable Growth Stocks to Invest in Now

Disclosure: None. This article is originally published at Insider Monkey.

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