InvestorQ : What is your quick take on the June quarter results of HDFC Bank?
Arti Chavan made post

What is your quick take on the June quarter results of HDFC Bank?

Rutuja Nigam answered.
4 weeks ago

On Saturday 16th July, HDFC Bank reported its Q1FY23 results. The bank showed double-digit growth in net profits, but that came largely on the back of lower than expected provisions and steady growth in asserts. However, it must be said that the profits were relatively stable and the growth tempo was also maintained. For the June 2022 quarter. HDFC Bank reported 20.9% yoy growth in net profits at Rs9,579 crore. It is expected to be the first Indian bank to cross the Rs10,000 crore profit mark, but that may be some time.

Let us look at the all-important growth in the credit book in the quarter. Total loans stood at Rs13.95 lakh crore, which is a growth of 21.6% on a yoy basis. Out of the total loan book, retail loans were about 39-40% of the total advances. Commercial and rural banking loans were 35% while corporate loans were 16%. The commercial and rural banking loans showed the best growth yoy of 29%. This indicative of a total recovery in the loan book growth after the growth had been relatively subdued due to the impact of COVID.

Now, let us turn to the critical return matrices. The net interest income (NII) for the June 2022 quarter grew by 14.5% to Rs19,481 crore. This was largely driven by advances growth of 22.5%. Deposits also saw a growth of 19.2% in the June quarter. During Q1FY23, HDFC Bank’s core net interest margin (NIM) stood at 4.1% on total assets and 4.2% on interest earnings assets. That has been relatively stable over time for HDFC Bank.

One concern could be that on QOQ basis there has been a deterioration in the asset quality of HDFC Bank. The gross non-performing assets (GNPAs) was up at 1.28%, although the gross NPAs were still lower on a yoy basis. Net NPAs at 0.35% hint at most of the potential losses largely provided for. The bank’s capital adequacy at 17.5% has shown a sharp deterioration from the levels of 19.1% on a yoy basis. Even on a sequential basis, the capital adequacy has shown lower levels.