HDFC Bank, India’s largest private sector lender, on Saturday posted a 35.3% year-on-year increase in net profit for the first quarter, while sequential earnings dropped.

What Happened: The bank’s net profit for the quarter ended June 30 came in at ₹16,174.75 crore, compared with the ₹11,952 crore it earned in the same quarter last year. Sequentially, the company’s profit slipped 2%. The bottom line figure beat analyst estimates of ₹15,764 crore.

The lender’s net interest income jumped to ₹29,837 crore from the ₹23,599 crore it earned a year ago, registering a jump of 26.4%. The figure was up 2.6% quarter on quarter and exceeded analyst expectations of ₹29,711 crore.

See Also: Oil India Appoints Saloma Yomdo As New Director Of Exploration & Development

Moderate sequential growth in loans and deposits likely affected profit and net interest income growth on a quarter-on-quarter basis.

Key Numbers: The company’s net interest margin, a key profitability metric, stood at 3.47%, in line with analyst estimates of 3.5%. The ratio, which measures the difference between the interest the bank earns on loans and the interest it pays on deposits, was eased quarter on quarter and fell 63 basis points from 4.1% a year ago due to higher funding costs.

In its Q1 business update, HDFC Bank’s advances dropped 0.8% quarter on quarter to ₹24.8 lakh crore, primarily due to the reduction of low-yielding corporate loans. Deposits stood flat at ₹23 lakh crore on a sequential basis.

Going forward, analysts expect a re-rating for HDFC Bank’s stock to hinge on the progress of deposit and loan growth as well as margin trajectory. ICICI analysts have forecast an around 18% year-on-year growth in deposits and 13% loan growth for FY25.

Price Action: The scrip shed 0.61% to end Friday’s session at ₹1,605 ahead of the earnings update. The stock has fallen 5.5% so far this year.

Read Next: Reliance’s Net Profit Slips 5% To ₹15,138 Cr Missing Estimates