Shares of HDFC Bank were dipping slightly on Monday morning after India’s largest lender posted robust fourth-quarter results but left many confused by huge provisions for bad loans.

Price Action: HDFC Bank reported a standalone net profit of ₹16,511.85 crore for Q4, marking a 37% increase compared with ₹12,047.5 crore a year ago. The figure beat analyst estimates of ₹15,663 crore.

The standalone net interest income (NII), a key indicator of the bank's core profitability, stood at ₹29,077 crore, growing 24.5% from the previous year's ₹23,351.8 crore. This was mostly in line with analyst estimates of ₹29,010 crore.

Meanwhile, the lender's core net interest margin stood at 3.44% on total assets, and 3.63% based on interest-earning assets. 

HDFC Bank’s board also recommended a dividend of ₹19.5 per share compared with ₹19 per share declared last year.

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The Sticking Point: However, much of the debate around the lender’s results were centred around the bank’s floating provisions of ₹10,900 crore, which many investors saw as unnecessary and likely squeezed the bank’s margins.

While year-ago figures are not comparable for the whole business given the merger between HDFC and HDFC Bank, the group’s consolidated net profit rose only 1.6% to ₹18,012.87 crore from the preceding third quarter.

Price Action: Shares of HDFC Bank were down 0.87% at ₹1,518.05 near the start of trade on Monday.

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