hdfc Bank Ltd bank share

HDFC Bank Ltd (updated - 28 April 2010)
HDFC Bank exceeded analysts’ estimates of net interest income and net profit, though operating profit growth lagged marginally. Net interest income in the fourth quarter of 2009-10 jumped 27 per cent to Rs 2,351 crore, as the loan book grew 27 per cent and net interest margins (NIMs) improved 4.4 per cent.

The current and saving account (Casa) ratio jumped 500 basis points to 50 per cent in the March quarter, leading to better cost of funds. A higher growth of 40 per cent in relatively less competitive corporate loans led to better yield on advances. Operating or pre-provisioning profit growth came in at 8 per cent (Rs 1,695 crore), as against analysts’ expectations of 8.5 per cent, due to higher operational costs.

Net profit growth of about 33 per cent at Rs 837 crore was 200 basis points above estimates, courtesy improved asset quality, which resulted in 33 per cent lower provisioning. Net non-performing assets (NPAs) dipped 30 basis points to 0.3 per cent. For 2009-10, total net income grew 14 per cent to Rs 12,190 crore, while net profit jumped 31.3 per cent to Rs 2,949 crore.

Going ahead, the scenario for core bank lending is robust with the economy picking up. The management expects the ratio of 45:55 in loans to total advances to remain almost the same, though the difference in growth of 40 per cent in corporate and about 22 per cent in retail (adjusted for Centurion) will narrow, as the latter is also picking up. NIM expansion in a rising interest rate scenario also looks difficult. A 50 per cent Casa ratio may not sustain, as the bank will also be vying for fixed deposits to fuel growth. Growth in treasury profits is unlikely to contribute significantly, as bond yields are likely to inch up.

The stock ended at Rs 1,980, down 0.5 per cent over its previous close on Tuesday. Investors can accumulate it at current valuations (3.7x price to estimated book value for FY11) for the long term, according to analysts.
source - business standard

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Overall, net interest income grew 29.4 per cent on the back of growth in assets. One of the main reasons for the growth has been the banks strong current account and savings account (Casa) base, which accounts for its low cost of funds and gives it acompetitive position in the market place. Casa deposits grew a staggering 37 per cent in the June quarter over the previous year, taking the Casa share to 49.2 per cent. This is easily one of the best in the industry and a great operating lever, reckon analysts.

The management mentioned that gross advances grew around 40 per cent. Of this, about 10 per cent was due to short-term one-off movements in wholesale loans. Interestingly, retail loans grew 24 per cent and accounted for 51 per cent advances. Treasury income, which accounts for around 20 per cent of income, however, took a minor hit.

But asset quality remains strong with net non-performing assets (NPAs) accounting for 0.3 per cent of net advances and the NPA provision coverage ratio remaining strong at 77 per cent (excluding write-offs) - up from the 70 per cent levels in the same period of the previous year.
Therefore, in many ways, the premium position is justified, say analysts.
source - Business Standard

HDFC Bank Ltd (updated - 21 Oct 2010)
Strong growth in core loan portfolio (excluding one-offs), rocksteady margins in the current and savings account (Casa) segment at 50 per cent, slightly weak fee growth and stable asset quality were the key features of HDFC Bank’s results for the September quarter.

The loan growth was supported by a 33 per cent yearon-year (y-o-y) rise in retail as well as wholesale segments. Non-retail advances grew at a faster pace due to the low base effect. Retail loans saw strong traction across auto, mortgages and commercial vehicle segments.

While the bottom line was partially driven by the lower-than-anticipated provisioning, the robust growth has been in line with the balanced business growth the bank has witnessed during the first half of the current financial year. On the operational front, expenses rose 19 per cent due to a 28 per cent surge in employee costs. Total provisions declined 24 per cent y-o-y to `450 crore despite higher floating provision. Growth in core fee income (up 16 per cent y-oy) was sluggish due to lower third-party distribution and is likely to remain under pressure in 2010-11.

Net interest income grew 29.2 per cent y-o-y driven by robust growth in advances and stable net interest margins (NIMs). Analysts at Motilal Oswal expect NIMs to remain stable at 4.2 per cent on the back of strong Casa ratio and improved asset yields in arising interest rate scenario.

Loan growth is expected to remain robust at 30 per cent in 2010-11 and 2011-12 from both corporate and retail books, supported by lower drag from the rundown of the erstwhile Centurion Bank loan book. Earnings growth for the bank is pegged at 33 per cent this year and 25 per cent over 2011-13.

While analysts believe good operating performance is more or less priced in, the catalyst is rising rates. The stock closed 1.2 per cent lower at `2,337 on Wednesday and trades at 28x2010-11E and 21.2x201112E earnings per share, according to analysts estimates.
source - Business Standard

HDFC Bank: Banking on consistency (updated - 20 July 2010)
There is no wondering why HDFC Bank enjoys apremium in the market. The bank maintained its 30 per cent-plus growth in net earnings for the quarter ended June. Net profit rose 33.9 per cent year-on-year to Rs 811.7 crore. The bank managed to increase net interest margins from 4.2 per cent to 4.3 per cent in the quarter, even though analysts were skeptical as the cost of funds rose 18 basis points (due to the change in the way the interest rate on savings accounts is calculated).