(“High Returns with Low Risk is the Key”)
34,324 Cr (6.93%)
YoY | 38,287 Cr (-4.11%) QoQ
Year ended 147,068
Cr Vs. 124,107 Cr (18.51%)
Net Profit of 6,927
Cr
5,676 Cr (22.04%)
YoY | 7,280 Crs (-4.84%) QoQ
Year ended 27,254
Cr Vs. 22,332 Cr (22.03%)
EPS (in Rs) 12.6
10.3 YoY | 13.2 QoQ
12 months ended EPS: 49.5 Vs. 41.3
Gross NPA 13,773 Cr
11,769 Cr YoY |
12,650 Cr QoQ
Net NPA at 3,280 Cr
3,568 Cr YoY 3,542
Cr QoQ
GNPA(%) 1.36 vs
1.40 YoY 1.26 QoQ
NNPA(%) 0.33 vs
0.43 YoY 0.36 QoQ
View:
Result is above expectation
and strong result. YoY total income increased and profit also up. However QoQ
total income and profit both have decreased due to other Income impact, other
income recorded around INR 4,075 Cr Vs. 6,033 Cr in QoQ. HDFC Bank set aside
provisions and contingencies worth INR 3891.5 crore during the first quarter of
this fiscal.
Business Updates & Highlights:
The bank did not disclose the proportion of loans under moratorium. The Reserve Bank of India has permitted banks to offer a six-month moratorium on loan repayments.
Net interest income (interest earned less interest expended) for the quarter ended June 30, 2020 grew by 17.8% to INR 15,665.4 crore from INR 13,294.3 crore for the quarter ended June 30, 2019, driven by growth in advances of 20.9%, and a growth in deposits of 24.6%. The net interest margin for the quarter was at 4.3%.
Other income (non-interest revenue) at INR 4,075.3 crore was 20.6% of the net revenues for the quarter ended June 30, 2020 as against INR 4,970.3 crore in the corresponding quarter ended June 30, 2019. ‘Fees & commissions’, which goes into other income of stood at INR 2,230.7 crore compared to INR 3,551.6 crore in the corresponding quarter of the previous year therefore declined by 37.2%.
Provisions and contingencies for the quarter ended June 30, 2020 were INR 3,891.5 crore (consisting of specific loan loss provisions of INR 2,739.8 crore and general provisions and other provisions of INR 1,151.7 crore) as against INR 2,613.7 crore (consisting of specific loan loss provisions of INR 2,248.0 crore and general provisions and other provisions of INR 365.7 crore) for the quarter ended June 30, 2019. Total provisions for the current quarter included contingent provisions of approximately INR 1,000 crore.
Total balance sheet size as of June 30, 2020 was INR 1,545,103 crore as against INR 1,265,253 crore
as of June 30, 2019, a growth of 22.1%.
Total deposits as of June 30, 2020 were INR 1,189,387 crore, an increase of 24.6% over June 30,
2019. CASA deposits comprising 40.1% of total deposits as of June 30, 2020.
Total advances as of June 30, 2020 were INR 1,003,299 crore, an increase of 20.9% over June 30, 2019.
Domestic advances grew by 21.0% over June 30, 2019. While total retail advances rose 7.2% to Rs 4.75 lakh crore as of June 30 over the last one year, loans in the auto, two-wheeler, commercial vehicles and commercial equipment categories declines. Loans against securities also contracted. Retail loans comprise 48%
of the banks’ total lending book
The Bank’s total Capital Adequacy Ratio (CAR) as per Basel III guidelines was at 18.9% as on
June 30, 2020 (16.9% as on June 30, 2019)
Bank has two subsidiaries:
HDFC Securities Limited (HSL) is amongst the leading retail broking firms in India. As on June 30, 2020, the Bank held 96.5% stake in HSL.
HDB Financial Services Limited (HDBFSL) is a non-deposit taking non-banking finance company (‘NBFC’) offering wide range of loans and asset finance products to individuals, emerging businesses and micro enterprises. As on June 30, 2020, the Bank held 95.3% stake in HDBFSL. The consolidated net profit for the quarter ended June 30, 2020 was INR 6,927 crore, up 22.0%, over the quarter ended June 30, 2019. Consolidated advances grew by 19.6% from INR 880,939 crore as on June 30, 2019 to INR 1,053,683 crore as on June 30, 2020
Financial:
ROE and ROCE is around 17% and 7.3% respectively and book value per share is around INR
325 and share is currently trading at 3.4x of its book value. Bank is currently
trading at annualized PE of around 23 which is average as per industry
benchmark. Promoter hold around 26.1% in the bank, FIIs and mutual fund hold
around 37% and 14% respectively. The Bank held floating provisions of Rs 1,451
crore and contingent provisions of Rs 4,002 crore as on June 30, 2020
Share View:
Share price high 1,304 (52
week) and now 1,100. HDFC Bank Limited is a publicly held banking company engaged in providing a range of banking and financial services including retail
banking, wholesale banking and treasury operations
Strong support at INR 1,050/950. Long term investor should continue with the company and any
correction with good opportunity to add on SIP basis.
Opportunities:
Strong Balance sheet and
continuously showing strength in YoY and QoQ especially for deposit, advances
all grew in YoY and QoQ. CASA deposit ratio is also improved around 40.1% of
total deposits. Despite Covid – 19 outbreak HDFC has increased NII and also
bottom line improved in YoY. Further after Yes bank Fiasco retail banking /
customer are also looking for big bank like HDFC. Strong brand network: As of
June 30, 2020, the Bank’s distribution network was at 5,326 branches and 14,996
ATMs / Cash Deposit & Withdrawal Machines (CDMs) across 2,825 cities /
towns as against 4,990 branches and 13,727 ATMs / CDMs across 2,764 cities /
towns as of June 30, 2019. Number of employees were at 115,822 as of June 30,
2020 (as against 104,154 as of June 30, 2019).
Risk:
QoQ result is down NII and
profit declined due to other income impact. Other income down in YoY and QoQ.
The main components of other income Fee & Commission declined by more than
37% in this quarter. The continued slowdown in economic activity has led to a
decrease in loan originations, the sale of third party products, the use of
credit and debit cards by customers, the efficiency in collection efforts and
waiver of certain fees. The continued slowdown may lead to a rise in the number
of customer defaults and consequently an increase in provisions there against.
Disclaimer:
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