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HDFC Bank: Solid Performance Amidst a Difficult Environment - Views on News from Equitymaster
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  • May 3, 2017 - HDFC Bank: Solid Performance Amidst a Difficult Environment

HDFC Bank: Solid Performance Amidst a Difficult Environment
May 3, 2017

HDFC Bank declared the results for the fourth quarter of financial year ending March 2017 (4QFY17). The bank has reported 21.5% YoY and 18.3% YoY growth in net interest income and net profits respectively in 4QFY17.

Performance summary
  • Net interest income grew by 21.5% YoY in 4QFY17 on the back of 19.4% YoY growth in advances.
  • NIMs remained stable at 4.3%.
  • Cost to income ratio reduced over the year from 44.4% to 41.7% in 4QFY17.
  • Net NPA to advances were flat at 0.3% in 4QFY17, while the gross NPAs remained flat at 1.05% of advances.
  • Capital adequacy ratio (CAR) comfortable at 14.6%, Tier I CAR at 12.8% at the end of March 2017.
  • For FY17, Net interest income grew by 20.1% while net profits grew by 18.3% compared to FY16.

    Financial Snapshot
    Rs (m) 4QFY16 4QFY17 Change FY16 FY17 Change
    Interest income 159,968 181,144 13.2% 602,215 693,060 15.1%
    Interest expense 85,434 90,593 6.0% 326,299 361,667 10.8%
    Net Interest Income 74,533 90,551 21.5% 275,915 331,392 20.1%
    Net interest margin (%) 4.3% 4.3%
    Other Income 28,659 34,463 20.3% 107,517 122,965 14.4%
    Other Expense 45,843 52,220 13.9% 169,797 197,033 16.0%
    Provisions and contingencies 6,625 12,618 90.5% 27,256 35,933 31.8%
    Profit before tax 57,349 72,794 26.9% 213,636 257,324 20.4%
    Tax 16,982 20,275 19.4% 63,417 75,894 19.7%
    Profit after tax/ (loss) 33,742 39,901 18.3% 122,962 145,496 18.3%
    Net profit margin (%) 21.1% 22.0% 20.4% 21.0%
    No. of shares (m)* 2562.6
    Book value per share (Rs) 349.1
    P/BV (x)* 4.4

    *Book value as on 31st March 2017

  • HDFC Bank reported solid numbers considering the challenging overall environment. The retail advances grew at an impressive rate of 22.1% in 4QFY17. Within the retail loan segment, the fastest growing segments were Personal Loans and the Credit Card segment.
  • Deposit growth for HDFC Bank at 17.8% YoY remained robust while the overall balance sheet grew by 16.6% YoY. CASA (low cost deposits) as a share of total deposits saw a steep increase post demonetisation period as well and had a share of 48.0% in 4QFY17.

    CASA Deposits Growth Continue to Remain Robust
    (Rs m) 4QFY16 % of total 4QFY17 % of total Change
    Advances 4,644,623 5,545,680 19.4%
    Retail 2,368,758 51.0% 2,939,210 53.0% 24.1%
    Corporate 2,275,865 49.0% 2,606,470 47.0% 14.5%
    Deposits 5,463,837 6,436,400 17.8%
    CASA 2,363,865 43.3% 3,091,530 48.0% 30.8%
    Term deposits 3,099,972 56.7% 3,344,870 52.0% 7.9%
    Credit deposit ratio 85.0% 86.2%
  • HDFC Bank continued to see stable NPA numbers. Gross NPAs were at 1.05% while net NPAs at 0.3% of advances respectively.
  • The bank reported higher provisioning costs over the previous year. It reported Rs 9,779 million under specific loan loss provision costs. The specific loan loss provisions are provisions on accounts that would have turned non-performing (NPA) during the quarter ended December 2016, but were classified as NPA during the quarter ended March, 2017.
  • As of March 2017, the bank's distribution network was at 4,715 branches and 12,260 ATMs in 2,657 cities. 52% of the bank's branches are now in semi urban and rural areas. The number of employees were at 84,325 as of March 2017.
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