HDFC Bank continued its remarkable financial performance in the third quarter. The bank's earnings jumped by over 40% and income from operations was higher by 35%. The bank's performance is in line with our expectations.
Income from operations
Operating Profit Margin (%)
Provisions and contingencies
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares
Diluted Earnings per share*
The bank has improved its operating margins through stiff contol on operating costs. However, a competitive environment resulted in a more than proportionate rise in interest expenses. The bank's cost to income ratio declined to 45% in 3QFY02 from 54% in the comparable previous quarter. A strong growth in other income also inflated its bottomline figure. Other income contributed 16% to the bank's total income, up from 13% in 3QFY01.
During the first nine months, the bank's income from core business of lending and investment income grew at healthy rates. Investment income currently contributes 50% of its total interest income. The proportionate contribution of this stream of revenues is likely to be on the higher side in the coming quarters as corporate lending opportunities are drying up.
Break-up of interest income
Interest on advances
Income from investments
Interest on balance with RBI
The bank's business grew at an encouraging rate in the first nine months of the current year. While its total deposits grew by 34%, saving accounts deposits jumped by 66% (accounting for 17% of total deposits). Total number of retail accounts rose by 36% to 1.9 m from 1.4 m as on March 2001. Its branch network was expanded to 147 outlets in 63 cities from 131 outlets in 53 cities in March 2001, while the ATM network increased by 75% from 207 in March 2001 to 363 as on December 2001. With the launch of credit cards the bank has further expanded its retail banking offerings, which already included various deposit products, car loans, loans against shares & RBI Bonds, personal loans and debit cards among others.
At the current price of Rs 234, HDFC Bank is trading at a P/E of 20x FY02 projected earnings. Its Price/Book value ratio of 3x (after considering ADS issue) is comparatively higher than its peers. We have projected about 40% growth in the bank's earnings for FY02. The bank's higher capital base is likely to support its rapid growth in future. (Consequent to the ADS issue, HDFC Bank's capital adequacy ratio increased to 16.5%).
HDFC Bank declared the results for the third quarter of financial year ending March 2017 (3QFY17). The bank has reported 18% YoY and 15% YoY growth in net interest income and net profits respectively in 3QFY17.
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