Result Analysis: HDFC bank (CMP: Rs.1,593) | Result Update: Q3FY23 |
HDFC Bank Ltd. is one of India’s leading private bank with banking network of 6,499 branches and 18,868 ATMs in 3,226 cities/towns. It offers a wide range of commercial and transactional banking services and treasury products to wholesale and retail customers. The bank has three key business segments: Wholesale Banking Services, Retail Banking Services and Treasury. The services offered by the bank include Personal Accounts & Deposits, Loans, Cards, Forex, Investments and Insurance.
Stock Details | |
Market Cap. (Cr.) | 892754.88 |
Face Value | 1.00 |
Equity (Cr.) | 557.68 |
52 Wk. high/low | 1722 / 1272 |
BSE Code | 500180 |
NSE Code | HDFCBANK |
Book Value (Rs) | 470.38 |
Sector | Banks |
Key Ratios | |
ROE (%): | 16.69 |
EPS: | 74.84 |
P/BV: | 3.4 |
P/E: | 21.39 |
Result Highlights:
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HDFC bank reported a strong 19.9% YoY and 14.1% QoQ increase in the consolidated net profit for the December quarter’ 22.
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Net Interest Income of the bank grew by 23.3% YoY and 8.3% QoQ to Rs. 24,497 cr. While Net Interest Margin stood unchanged at 4.1% on QoQ and YoY basis.
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Banks’s total advances grew to Rs.15.07 lakh cr. by 19.5% YoY in Q3FY23 compared to Rs. 12.60 lakh cr. in Q3FY22.
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On yearly basis, Domestic retail loans grew by 21.4%, commercial and rural banking loans grew by 30.2% and corporate and other wholesale loans grew by 20.3%. Overseas advances constituted 2.8% of total advances.
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Total deposits aggregated to Rs.17.34 lakh cr. as of December 31, 2022, a growth of 19.9% over Rs.14.46 cr. for the same period of FY22 and a growth of around 3.6% over Rs.16.73 cr. as of September 30, 2022.
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CASA deposits grew by 12% YoY with savings account deposits at Rs. 535,206 cr. and current account deposits at Rs. 227,745 cr.
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The Bank’s CASA ratio stood at 44% for Q3FY23 as compared to 47.1% in Q3FY22 and 45.4% of Q2FY23.
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Asset quality of the bank remained unchanged on QoQ basis; Gross NPA and Net NPA ratio were at 1.23% and 0.33% respectively for the Q3FY23.
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HDB Financial Services, subsidiary of HDFC Bank saw improvement in the asset quality. Stage-3 assets were down from 4.88% to 3.73% QoQ.
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During the quarter ended December 31, 2022, the Bank purchased loans aggregating Rs.0.89 cr. through the direct assignment route under the home loan arrangement with Housing Development Finance Corporation Limited.
Financial Performance:
Shareholding Pattern:
Shareholding Pattern | % |
Promoters & Promoter Group | 20.91 |
FIIs | 45.07 |
DIIs | 22.59 |
Public | 9.87 |
Others | 1.56 |
Conference Call Highlights:
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Management will continue to focus on granular deposit growth which will be partly aided by branch addition in the near term.
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Expecting healthy credit demand in the NBFCs, telecom, PSU and infrastructure segments to sustain.
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Margins may witness some pressure in the near term. However, it will remain in the historical range.
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The bank issued 1.2 mn cards during the quarter.
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The bank added 684 branches during the quarter and 600 more are in pipeline. Gold loan processing is offered from 3938 branches.
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On the merger’s update, bank said, The NCLT hearing is on January 27, 2023.
Outlook:
HDFC Bank reported in-lined results in the December quarter with increase in NII, declining provisions and stable Asset quality. Total Deposits and advances of the bank has grown at an aggressive rate of over 19% YoY. Total Retail loans grew by 19.9% and total commercial and rural banking advances grew at the rate of 30.2% YoY. Current ratios of the bank also remained healthy for the quarter, total Capital Adequacy Ratio is at 19.4% as against the regulatory requirement of 11.7%. Management of the bank plans to double the branch counts in three years’ timeframe. Overall the bank is showing good positive outlook for the longer term. In the 9MFY23 the bank reported the EPS of Rs.60.06 and we expect FY23 to close at eEPS of Rs.80 at the current P/BV of 3.38x.
Results:
Particulars (In Rs. Cr.) | Q3FY23 | Q2FY23 | Q3FY22 | QoQ% | YoY% | 9M FY23 | 9MFY22 | FY22 |
Interest earned | 45,002 | 40,930 | 34,588 | 9.9% | 30.1% | 1,23,206 | 1,00,362 | 1,35,93,641 |
Interest Expended | 20,505 | 18,311 | 14,724 | 12.0% | 39.3% | 55,174 | 43,358 | 58,584 |
Net Interest Income | 24,497 | 22,619 | 19,864 | 8.3% | 23.3% | 68,032 | 57,004 | 1,35,35,057 |
Operating Profit | 20,180 | 18,722 | 18,034 | 7.8% | 11.9% | 55,391 | 51,078 | 68,799 |
Provisions | 3,244 | 3,765 | 3,816 | -13.8% | -15.0% | 10,675 | 13,895 | 17,925 |
Net Profit after tax | 12,698 | 11,125 | 10,591 | 14.1% | 19.9% | 33,403 | 27,610 | 38,053 |
Deposits | – | – | – | – | 19.9% | 17,33,204 | 14,45,918 | 15,59,217 |
Advances | – | – | – | – | 19.5% | 15,06,809 | 12,60,863 | 13,68,821 |
Segment Revenue (In Rs. Cr.) | Q3FY23 | Q2FY23 | QoQ% | Q3FY22 | YoY% |
Treasury | 9551 | 7910 | 20.7% | 9,192 | 3.9% |
Retail Banking | 35302 | 35125 | 0.5% | 29,253 | 20.7% |
Wholesale Banking | 25375 | 21266 | 19.3% | 18,726 | 35.5% |
Other Banking Operations | 9483 | 9450 | 0.3% | 8,386 | 13.1% |
Unallocated | 1045 | 403 | 158.9% | – | – |
Total | 80755 | 74154 | 8.9% | 65,556 | 23.2% |
Less: Inter Segment Revenue | 26632 | 24972 | 6.6% | 22,191 | 20.0% |
Total Revenue from Operations | 54123 | 49182 | 10.0% | 43,365 | 24.8% |
Ratios (%) | Q3FY23 | Q2FY23 | Q3FY22 | QoQ% | YoY% |
Gross NPA | 1.23 | 1.23 | 1.26 | 0.00% | -2.38% |
Net NPA | 0.33 | 0.33 | 0.37 | 0.00% | -10.81% |
Provision Coverage Ratio | 73 | 73 | 71 | 0.00% | 2.82% |
Net Interest Margin | 4.3 | 4.3 | 4.3 | 0.00% | 0.00% |
Capital Adequacy Ratio | 19.4 | 18 | 19.5 | 7.78% | -0.51% |
CASA Ratio | 44 | 45.4 | 47.1 | -3.08% | -6.58% |
Product Wise Advances (In Rs. Cr.) | Q3FY23 | Q2FY23 | QoQ% | Q3FY22 | YoY% |
Personal Loans | 1,64,641 | 1,54,820 | 6.3% | 1,33,399 | 23.4% |
Auto | 1,12,442 | 1,08,788 | 3.4% | 96,426 | 16.6% |
Home Loans | 97,593 | 93,050 | 4.9% | 78,992 | 23.5% |
Payment Products | 83,314 | 81,966 | 1.6% | 73,305 | 13.7% |
Loan Against Property | 72,436 | 69,313 | 4.5% | 57,736 | 25.5% |
Two Wheelers | 9,759 | 9,597 | 1.7% | 9,288 | 5.1% |
Gold Loans | 10,042 | 9,434 | 6.4% | 8,198 | 22.5% |
Other Retail | 56,374 | 53,580 | 5.2% | 48,407 | 16.5% |
Total Retail Assets | 6,06,602 | 5,80,546 | 4.5% | 5,05,751 | 19.9% |
Emerging Corporates | 1,70,623 | 1,64,558 | 3.7% | 1,36,421 | 25.1% |
Business Banking | 2,32,049 | 2,18,014 | 6.4% | 1,73,644 | 33.6% |
Commercial Transportation | 99,684 | 91,890 | 8.5% | 74,130 | 34.5% |
Agriculture | 70,912 | 70,278 | 0.9% | 56,031 | 26.6% |
Total Commercial & Rural Banking | 5,73,268 | 5,44,740 | 5.2% | 4,40,226 | 30.2% |
Corporates & Other Wholesales | 3,92,254 | 3,96,779 | -1.1% | 3,26,182 | 20.3% |
Source: Company website, EWL Research
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