Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
HDFC Bank: On a growth spree - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jul 17, 2002

    HDFC Bank: On a growth spree

    HDFC Bank has once again reported stellar performance for the first quarter ended June 2002. Fueled by its strong focus on retail banking, the bank's interest income grew by 23% and profits jumped by 33%, YoY. The bank also managed to improve its operating margins through cost control and lower interest cost.

    (Rs m) 1QFY02 1QFY03 Change
    Income from operations 3,882 4,792 23.4%
    Other Income 673 813 20.9%
    Interest expense 2,480 2,907 17.2%
    Net interest income 1,402 1,885 34.4%
    Other expenses 935 1,202 28.5%
    Operating Profit 467 683 46.3%
    Operating Profit Margin (%) 12.0% 14.3%  
    Provisions and contingencies 236 346 46.4%
    Profit before Tax 903 1,150 27.4%
    Tax 283 326 15.2%
    Profit after Tax/(Loss) 620 824 32.9%
    Net profit margin (%) 16.0% 17.2%  
    No. of Shares (m) 243.6 281.8  
    Diluted Earnings per share* 8.8 11.7  
    P/E Ratio   18.0  

    During the quarter, the bank focused on balance sheet consolidation and on increasing the proportion of retail loans in overall asset growth. Its total deposits also grew by over 33% YoY to Rs 176 bn as on June 30, 2002. Low cost funds accounted for 41% of total deposits raised by the bank as on March 2002. The bank's relatively higher access to savings and current account funds has enabled it to bring down its average cost of funds (6.3% as on March 2002).

    Despite its ongoing network expansion, HDFC Bank managed to maintain its cost to income ratio at 45%, which is in line with its private sector peers. This coupled with the bank's higher fee based income fueled its bottomline growth. Taking advantage of higher operating profits, the bank increased its NPA provisions in the June quarter. Its net NPAs to advances ratio at 0.5% with NPA coverage of 85% is the best in the industry, reflecting the bank's asset quality.

    Revenue mix
    (Rs m) 1QFY02 1QFY03 Change
    Interest on advances 1,460 1,760 20.5%
    Income on investments 1,998 2,621 31.2%
    Interest on balance with RBI 421 405 -3.9%
    Others 2 6 171.4%
    Total 3,882 4,792 23.4%

    At the current market price of Rs 210 HDFC Bank is trading at a P/E of 18x 1QFY03 annualised earnings and Price/Book value ratio of 3x. The bank's valuations are one of the highest in the sector due to its ability to maintain strong profit growth and superior asset quality. Its capital adequacy ratio at 15% would support its future business expansion. However, increasing competition from both foreign and other private sector banks could trim HDFC Bank's earnings growth and consequently its valuations.



    Equitymaster requests your view! Post a comment on "HDFC Bank: On a growth spree". Click here!


    More Views on News

    HDFC Bank: Asset Quality Deteriorates due to Farm Loan Waiver (Quarterly Results Update - Detailed)

    Jul 25, 2017

    Asset quality was under pressure on account of farm loan waivers. Despite the higher provisioning, the company reported a healthy profit growth of 20%.

    HDFC Bank: Solid Performance Amidst a Difficult Environment (Quarterly Results Update - Detailed)

    May 3, 2017

    Personal Loans and Credit Cards help HDFC bank report a robust set of numbers over the fourth quarter and for the financial year 2017.

    HDFC Bank: Growth Stumbles Post Demonetisation (Quarterly Results Update - Detailed)

    Jan 30, 2017

    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.

    SBI: Asset Quality and Slow Credit Remain Achilles' Heel (Quarterly Results Update - Detailed)

    Aug 22, 2017

    State Bank of India (SBI) continues to battle sliding asset quality and sluggish credit growth.

    IDFC Bank: Strong Trading Income Shields Credit Slowdown (Quarterly Results Update - Detailed)

    Aug 10, 2017

    IDFC Bank is taking steps to address contracting NIMs and successfully transition in to a retail bank.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    Dear PM Modi, India is Already Land of Self-Employed, and It Ain't Working(Vivek Kaul's Diary)

    Aug 21, 2017

    Most Indians who cannot find jobs, look at becoming self-employed.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Think Twice Before You Keep Money In A Savings Bank Account(Outside View)

    Aug 22, 2017

    Post demonetisation, a cut in bank savings deposits rates was in the offing.

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 24, 2017 10:49 AM


    • Track your investment in HDFC BANK with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks


    Detailed Quarterly Results With Charts