HDB Financial Services FY 2024–25 Review: 24% NII Growth, 12% PAT Decline & Asset Quality Headwinds

HDB Financial Services Ltd (HDBFS) delivered strong loan book expansion and net interest income growth in FY 2024–25, but rising NPAs and provisions led to a 12% drop in profit after tax. Healthy capital buffers and liquidity ratios position the NBFC well for moderating sector growth ahead.

1. Loan & Interest Income Growth

HDBFS reported net interest income of ₹ 13,835 cr in FY 2025, up 24% YoY from ₹ 11,156 cr¹. Advances grew over 20% year‑on‑year, driven by strong disbursements in personal and digital‑lending segments⁵.

2. Profitability & Provisioning

Profit after tax fell 11.6% YoY to ₹ 2,175 cr in FY 2025, down from ₹ 2,460 cr². Impairment expenses nearly doubled to ₹ 2,113 cr, up 98% YoY, as Stage 3 provisions rose sharply³.

3. Asset Quality Trends

The Gross Stage 3 (NPA) ratio increased to 2.26% in FY 2025 from 1.90% in FY 2024⁴. Continued stress in personal loans and MSME segments under the COVID‑19 resolution framework drove higher NPA formation.

4. Capital & Liquidity Position

HDBFS ended March 2025 with a strong capital adequacy ratio of 22.3% and a Liquidity Coverage Ratio (LCR) of 180%, well above regulatory minima⁶. These buffers support growth and absorb potential credit shocks.

5. NBFC Sector Outlook

NBFC loan growth in India is expected to moderate to around 15% over the next 12–18 months, as funding costs rise and bank credit tightens⁷⁸. ICRA projects sector AUM growth easing to 13–15% in FY 2025 from 18% in FY 2024⁹, requiring ₹ 5.6–6 trn in incremental funds¹⁰. Retail NBFCs may see NPAs tick up by 0.3–0.5% amid unsecured‑loan stress¹¹, while commercial‐bank credit growth slows to 12–14% FY 2025¹².

6. Strategic Priorities

• Strengthen collections and limit Stage 3 inflows through analytics and customer engagement.
• Diversify into secured products (gold loans, LAP) to improve collateral coverage.
• Optimize cost of funds via retail deposits and capital markets funding.

References

1. UnlistedZone.com: HDB Financials FY25 report (Interest Income, PAT, GNPA)
2. UnlistedZone X: Provisioning up 98% to ₹ 2,113 cr
3. HDBFS Investors page: Capital adequacy & LCR disclosures
4. UnlistedZone.com: Asset quality metrics (GNPA ratio)
5. UnlistedZone.com: Strong loan growth commentary
6. HDBFS Investors page: Capital & liquidity disclosures
7. FortuneIndia.com: NBFC loans to grow ~15% (Moody’s)
8. Reuters: NBFC profitability to moderate in next 12–18 months (Moody’s)
9. FinancialExpress.com: NBFC AUM growth to ease to 13–15% (ICRA)
10. BusinessStandard.com: Bank credit growth to slow to 12–14% FY 2025
11. BusinessToday.in: NBFC asset quality to see NPA rise 0.3–0.5%
12. FortuneIndia.com: Funding headwinds & AUM forecasts