HDFC Bank, India’s largest private lender by market capitalisation posted slightly soft Q1, Absolute Gross NPAs rose nearly 13% QOQ with profits slightly below estimates at Rs 7730 cr (ET NOW poll expectations of Rs 7900cr). Net Interest income was below expectations and Core Net interest margin was down about 10bps QOQ to 4.1%.
In the press release, management says, Covid second wave disrupted business activity for two thirds of the quarter. Lower business volumes coupled with higher slippages led to lower revenues & higher provisions. Q1 saw decline in collection efficiency and higher provisions. Q1 credit cost at 1.67% vs 1.64% QoQ (Vs 1.54% YoY). Total provisions stand at 146% of Gross NPAs includes all specific, floating & contingent provisions.
Bank’s Loan book grew 14.4% YoY led by wholesale and Commercial & Rural banking however Retail disbursements had slowed down as per the Q1 update. Deposit book grew at 13.2% YoY with CASA ratio at 45.5%.
Subsidiary HDB Financial also reported high rise in Gross NPA ratio to 7.75% vs 3.89% QOQ (Vs 2.86% yoy) and profits were flat. HDFC Securities posted strong profit growth of 95% to Rs 260cr.
The bank is well capitalized and has made higher provision buffers, however clearly the asset quality has been impacted due to the Covid second wave. Key Monitorable: Management commentary on will the impact on asset quality spill over to Q2 will be important. Commentary on Credit card business, the RBI’s feedback, progress on the technology front and overall growth outlook will be keenly watched out for.
HDFC BANK Q1FY22 REVIEW
PAT at Rs 7,730 cr vs Rs 6,659 cr YoY
NII at Rs 17009 cr vs Rs 15665 cr,up 8.6% yoy
PPP (Profits before provisions) at Rs 15137 cr vs Rs 12829 cr YoY, up 18% yoy
Provisions at Rs 4831 cr vs Rs 3892 cr YoY vs. `4694 cr QoQ
Fee and commission at Rs 3885 cr vs Rs 2230cr, up 74% yoy
NIM at 4.1% vs 4.2% QOQ
ASSET QUALITY
Gross NPA at Rs 17098 cr vs Rs 15086 cr QoQ, UP 13.3% QoQ
Gross NPA at 1.47% vs. 1.32% QoQ
Net NPA at 0.48% vs 0.40% QoQ
Q1 credit cost at 1.67% vs 1.64% QoQ (Vs 1.54% YoY)
Total provisions at 146% of Gross NPAs includes all specific, floating & contingent provisions
Q1 provisions include contingent provisions of about Rs 600cr
Q1 floating provisions at Rs 1451 cr, contingent provisions at Rs 6596cr
HDFCB bank loan at Rs 11.47 lk cr, grew by 14.4% YoY
Loan growth led by wholesale book and commercial and rural banking
Bank’s deposits grew 13.2% YoY (+0.8% QoQ) to Rs 13.46 lk cr
CASA now forms 45.5% of deposits vs 46.1% QOQ (VS 40.1% yoy)
HDB Financial
NPA at 7.75% vs 3.89% QOQ (Vs 2.86% yoy)
PAT Rs 1655 cr vs Rs 1609cr yoy
HDFC SECURITIES
PAT at Rs 260cr , up 95% yoy
