HDFC Bank Ltd. share price target

Bank (HDFCBK) posted strong and in-line with expectations results for Q4FY2018. The bank reported healthy operational performance, as seen in its net interest income (NII) growing by 18% y-o-y to Rs. 10,657 crore and noninterest income jumping by 22.7% y-o-y to Rs. 4,228 crore. Healthy growth in non-interest income (OI) was fueled by robust 32% y-o-y uptick in core fee income (fueled by third-party...

The bank reported a healthy and stable performance across the parameters: Loan growth was healthy at 4.3%/18.7% QoQ/YoY led by retail, NIMs were sequentially stable at 4.3%, asset quality was stable, and cost/Income ratio inched down further. Other income was strong despite the strong base.

HDFC Bank's 20.3% YoY growth in PAT was in-line with estimates driven by a strong fee income and controlled opex ratios. Loan growth at 18.7% YoY, however, lagged our expectations albeit on a high base of 4QFY17. We expect the same to bounce back to recent trends as corporate lending picks up (single digit YoY growth in 4QFY18 vs avg. of 18% seen in first nine months of the year). Slippage ratio was at 1.86% for 4QFY18 vs Average of 2.2% in the past four quarters. Core fees grew a robust 30% YoY and should sustain at healthy rates as against mid-teens growth last few years. With controlled opex (core CI ratio improved by 180bps YoY), core PPOP registered a healthy 24.8% growth. In our view, HDFC...

HDFCB reported 24% YoY core PPoP growth (in-line; 21% PPoP growth on muted capital gains of INR220m), led by steady revenue growth and controlled opex. However, higher provisions (INR15.4b, 15% miss owing to a contingent provision towards an agri account) resulted in 20% YoY PAT growth. Loans grew 19% YoY (+3% QoQ) to INR6.58t. Incremental growth in the quarter was driven by retail loans (6.0%/30% QoQ/YoY), resulting in an increase in its loan mix share to 69.7%. Post 4 quarters of trailing loan growth, deposits grew faster than advances at 22.5% YoY to INR7.89t, bringing down credit deposit ratio to 83% (90% in 3QFY18). Other income reported robust 23% YoY growth to INR42.3b (12% beat), led by 32% YoY growth in fees and commissions, while treasury gains were muted at INR0.22b vs INR1.8b in 4QFY17. Total core other income grew 29% YoY. Opex grew 16% YoY to INR60.6b (5% miss), partly offsetting the other income beat; cost to core income declined 46bp QoQ to 40.7%

HDFC Bank has a balance sheet size of ~INR8.96tn as at June 17. It is amongst the leading private sector banks with a market cap of over...

HDFC Bank (HDFCBK) has consistently grown its market share in loans and deposits across credit cycles, and has emerged as the best-managed bank in India with robust profitability/growth metrics. Increasing granularity of the balance sheet, a focus on fee income growth, an improvement in operating leverage aided by digital initiatives, and controlled credit costs backed by strong underwriting have enabled the bank to outperform most peers. We expect the bank to maintain its growth momentum (regardless of its systemic size) and further gain market share across business segments. This, coupled with steady revenue growth, a continued improvement in operating leverage and moderation in credit cost, will help accelerate earnings growth (24% CAGR over FY18-20E).

Q3FY18 Result Analysis: NII increased by 24.1% YoY and 5.8% QoQ in Q3FY18 (22.0% YoY and 4.1% QoQ) on the back of strong growth in advances driving interest income. Interest earned during the quarter grew by 16.9% YoY and 4.6QoQ (15.2% YoY and 5.4% QoQ in previous quarter) while the interest cost remained lower at 10.4% YoY due to the rationalization on deposits rates. Strong credit growth and higher share of low cost deposits base (CASA) positively impacted the NIM which remained stable at 4.3%. After strong expansion in network, bank is focusing on operating efficiencies along with...

HDFCB reported steady Q3FY18 with in line PAT of Rs 46.4 bn, up 20% YoY. This was driven by strong advances growth (~27.5% YoY) with resilient margin of 4.3%, 107 bps QoQ improvement in CASA ratio to 43.9%, strong traction in fee income (up 30% YoY)

HDFC Bank registered 17% rise in Interest income to Rs 20581.27 crore in the quarter ended December 2017. A 10% rise in interest expenses to Rs 10266.93 crore saw net interest income (NII) grow 24% to Rs 10314.34 crore. Other income grew 23% to Rs 3869.17 crore, which took net total income up 24% to Rs 14183.51 crore. Operating expenses increased 18% to Rs 5732.22 crore, after which OP grew 28% to Rs 8451.29 crore. Provision and contingencies soared 89% to Rs 1351.44 crore after which PBT grew 20% to Rs 7099.85 crore. As tax expenses grew 21% to Rs 2457.25 crore, net profit...

ICICI Securities Ltd | Retail Equity Research On the asset quality, the bank was able to manage divergence well. Total divergence for FY17 as per RBI was |2051 crore in GNPA for FY17 but from the same |1707 crore was upgraded based on JLF decision. Based on last disclosure |800-900 crore exposure to one 5:25 account (part of |2051 crore) was already known. Accordingly, the net impact of |294 crore from divergence was negligible. GNPA ratio saw an increase of 3 bps to 1.29% QoQ and NNPA ratio...