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HDFC Bank: Provision costs move higher - Views on News from Equitymaster
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HDFC Bank: Provision costs move higher
Oct 27, 2015

HDFC Bank declared the results for the second quarter of financial year ending March 2016 (2QFY16). The bank has reported 21.2% YoY and 20.5% YoY growth in net interest income and net profits respectively in 2QFY16. Here is our analysis of the results.

Performance summary

  • Net interest income grows 22.3% YoY in 1HFY16 on the back of 27.9% YoY growth in advances.
  • NIMs correct marginally to 4.2% due to lower loan yields..
  • Other income grows by a robust 29% YoY, with fees and commissions growing at 22% YoY.
  • Cost to income ratio remains stable at 45%.
  • Net NPA to advances remain stable at 0.2% of advances in 1QFY16 although gross NPAs move slightly higher to 1% of advances.
  • Capital adequacy ratio (CAR) comfortable at 15.5%, Tier I CAR at 12.8% at the end of September 2015.

Standalone performance summary

(Rs m) 2QFY15 2QFY16 Change 1HFY15 1HFY16 Change
Interest income 118,476 147,725 24.7% 230,677 288,135 24.9%
Interest expense 63,366 80,916 27.7% 123,851 157,439 27.1%
Net Interest Income 55,110 66,809 21.2% 106,826 130,696 22.3%
Net interest margin (%)       4.4% 4.2%  
Other Income 20,471 25,517 24.6% 38,976 50,137 28.6%
Other Expense 34,979 41,897 19.8% 66,763 81,906 22.7%
Provisions and contingencies 4,558 6,823 49.7% 9,387 14,092 50.1%
Profit before tax 40,602 50,429 24.2% 79,039 98,927 25.2%
Tax 12,228 14,912 21.9% 23,507 29,183 24.1%
Profit after tax/ (loss) 23,816 28,694 20.5% 46,145 55,652 20.6%
Net profit margin (%) 20.1% 19.4%   20.0% 19.3%  
No. of shares (m)         2,506.5  
Book value per share (Rs)         272.4  
P/BV (x)*         4.1  

*Book value as on 30th September 2015

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