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HDFC: Profitable growth on robust credit offtake - Views on News from Equitymaster
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HDFC: Profitable growth on robust credit offtake
Feb 26, 2016

HDFC declared its results for the third quarter (3QFY16). The institution has reported 10% YoY growth in net interest income while net profits have grown by a modest 6.7% YoY during 3QFY16. Here is our analysis of the results.

Performance summary

  • On the back of a 13% growth in loan book, HDFC posted a 10% growth in net interest income in 3QFY16. For 9mFY16, the net interest income was up by 11.3%.
  • The net interest margin remained steady at 3.9% for the quarter.
  • The other income was lower by 44.7% for 3QFY16 on account of higher profit on sale of investments booked in the year-ago quarter. For 9mFY16, other income was down by 40.8%.
  • Provisions were up by more than 51% and 47.8% for 3QFY16 and 9mFY16, respectively.
  • Capital adequacy and gross NPAs stand at 17.7% and 0.72% respectively at the end of December 2015.

Standalone financial performance snapshot

(Rs m) 3QFY15 3QFY16 Change 9mFY15 9mFY16 Change
Interest Income 67,584 72,591 7.4% 197,370 217,120 10.0%
Interest Expense 45,878 48,691 6.1% 133,922 146,500 9.4%
Net Interest Income 21,706 23,900 10.1% 63,448 70,620 11.3%
Net interest margins 3.93% 3.85%
Other Income 1,242 686 -44.7% 2,775 1,642 -40.8%
Other Expense 1,853 2,001 8.0% 5,366 5,902 10.0%
Provisions and contingencies 450 680 51.1% 1,150 1,700 47.8%
Profit before tax 20,645 21,905 6.1% 59,707 64,661 8.3%
Tax 6,390 6,700 4.9% 18,430 19,800 7.4%
Effective tax rate 31.0% 30.6% 30.9% 30.6%
Deferred Tax Liability - - -
Profit after tax/ (loss) 14,255 15,205 6.7% 41,277 44,861 8.7%
Net profit margin (%) 21.1% 20.9% 20.9% 20.7%
No. of shares (m) 1578.7
Book value per share (Rs)* 225.0
P/BV (x) 4.7

* (Standalone book value as on 31st December 2015)

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