tips to buy best finance buying and selling shares in India

HDFC Bank Ltd (updated - 15 July 2009)
Loans given by HDFC Bank grew by just over 7 per cent year-on-year in the June 2009 quarter. That may sound disappointing but since the bank has enough capital and liquidity, it’s obviously a conscious decision to hold back in a challenging environment where there aren’t enough good lending opportunities, especially in the retail space.

Sequentially, advances are up about 5 per cent which is probably better than the performance for the banking system. The slower pace of growth has left the bank with a net interest income of just Rs 1,856 crore for the quarter, up just 7.7 per cent yearon-year and flat sequentially. That’s been possible because the net interest margin (nim) has been maintained at 4.1 per cent — the higher share of cheaper current and savings accounts at 45 per cent, would have brought down the cost of funds.

If the bottom-line has grown by a far healthier 31 per cent to Rs 606 crore, it’s because of the higher other income, the biggest chunk of which was fees, up 27 per cent year-on-year. Also, costs have been reined in — the core costs to income ratio was lower at 52.2 per cent down 160 basis points year-on-year.

While not a serious concern, HDFC Bank’s gross non-performing assets have edged up to 2.1 per cent from 1.98 per cent at the end of the March 2009 quarter. Provisions at Rs 659 crore are more or less flat sequentially and will probably be at these levels for another quarter - much of this is believed to be on account of the Centurion Bank of Punjab loan portfolio.

However, HDFC Bank is well covered for bad loans with a coverage ratio of 100 per cent. Moreover, restructured assets, including applications to be looked at, are at just 0.55 per cent of gross customer advances. With adequate provisioning, a clean book and enough capital, HDFC Bank is well-positioned to grow as and when the economy turns. At Rs 1,357, the stock trades at around three times price to estimated 2009-10 book value but a less expensive 2.6 times 2010-11 estimated book value.
source - BS

Disclaimer: Information presented on this site is a guide only. It may not necessarily be correct and is not intended to be taken as financial advice nor has it been prepared with regard to the individual investment needs and objectives or financial situation of any particular person. Stock quotes are believed to be accurate and correctly dated, but does not warrant or guarantee their accuracy or date.
Our site takes no responsibility for any investment decisions based on recommendations provided on website.

HDFC Bank Ltd (updated - 24 April 2009)
Given that the credit environment is challenging it’s not surprising that the pace of growth at HDFC Bank is slowing down — advances for the March 2009 quarter are more or less at similar levels as they were in the December 2008 quarter. That appears to be a conscious decision and not abad one since the bank is holding excess government securities and can step up the acquisition of assets as and when the environment is more conducive to lending.

Moreover, the bank has sustained the net interest margin (NIM) at 4.2 per cent, which was lower by about 10 basis points sequentially, helped by a larger proportion of current and savings accounts which was up at 44 per cent. In fact the nim has ranged between 3.8 and 4.3 per cent over the last 16 quarters. The growth in the bank’s fee income continues to be remarkably strong, reflecting the tremendous strength of the bank’s corporate clientele. Net profits for the quarter have also been driven by bond gains and some savings in staff costs.

While the increase in provisions sequentially at 23 per cent, has been somewhat sharp, some of it could be accelerated provisioning for bond profits. Nevertheless, delinquencies have been higher in a weak credit market. The bank has, however, stepped up provisions to cover a fairly large portion of the restructured assets and as such the incremental impact of any defaults on this front will be minimal.

The ratio of net nonperforming loans(NPLs) to net advances stayed at 0.6 per cent in the March 2009 quarter similar to the levels at the end of December 2008. Going by current indications, loan growth in the current year could be around 18-20 per cent. While a changing portfolio mix in favour of corporate loans might bring down yields in the current year, it would also ensure that delinquencies are lower thereby protecting the bottom line.At Rs 1093, the stock trades at just under three times price to estimated 2009-10 book value.
source - BS

HDFC Bank Ltd (updated - 15 Oct 2009)
HDFC Bank’s net profit jumped 30 per cent year-on-year (y-o-y) for the quarter ended September 2009 (Q2), partly due to higher treasury income and cost control as well as a healthy 18 per cent rise in fee-based income to roughly Rs 692 crore.

Although the bank has lent more in Q2 compared to the relatively stagnant advances reported since the September 2008 quarter to June 2009 quarter, the Street was expecting a higher growth in advances. Because of this as well as a declining interest rate environment, the bank’s net interest income (interest income earned minus expended) grew just 5 per cent y-o-y, which was below expectations. While treasury gains were partly responsible for jump in the other income, the bank may not be able to get the cushion of higher trading gains in the coming quarters as yields have started firming up.

Besides trading gains, better productivity from its branches was also impressive. A tab on operating costs helped the bank reduce its cost-toincome ratio to 50 per cent compared to 55 per cent in second-quarter of last year; however, it was a tad higher than 47.5 per cent in the June 2009 quarter, which to some extent is on account of the 90-odd new branches it added during the quarter.

While the bank is still conservative in terms of lending to the retail segment, a higher traction in asset-backed products like auto and home loans helped retail loans grow 7 per cent y-o-y. The bank, however, has seen its lending to companies rise a robust 20 per cent y-o-y. The cautious approach to highyielding retail segment and preference to the corporate sector meant that net interest margins slipped 20 basis points (bps) to 4.4 per cent. This was despite the 200-300 bps rise in the lowcost CASA (current and savings account) deposit ratio, y-o-y as well as sequentially, to 47 per cent. The asset quality remained healthy with gross nonperforming assets down 30 bps to 1.8 per cent of gross advances; the bank also increased its provision coverage from 65 per cent to 70 per cent on a y-o-y basis. The stock is up 14 per cent in the last one month. At Rs 1,702, it trades at 3.7 times its 2010-11 estimated book value of Rs 470, leaving limited upside.
source - BS