HDFC Bank Result Analysis Q1 FY 2020

HDFC Bank 1QFY 2020 Results

HDFC Bank is India’s largest private sector bank with 5,130 banking outlet across 2,764 cities (as on June 30, 2019) and offers a range of banking services viz. commercial, investment banking, retail banking and financial services.

Consolidated Basis Results

Operating Performance: Strong growth in Net Interest Income (NII) by +22.8%/Rs. 14,199.3 crs, on a Y-o-Y basis mainly driven due to growth in the loan book (essentially assets for the Banks) by +17.2%/ Rs. 7,51,385.8 crores on Y-o-Y basis.Net Interest Margin (NIM) has remained steady at 4.3% in 1Q FY’20 vs. 4.4% in 4Q FY’19. HDFC Bank’s NIM has been consistent at 4.3-4.4% per cent for 11 quarters in a row.Growth in other income boosted Net Operating income by +27%/Rs. 11,749.17 crores, despite growth in operating costs. The core cost-to-income ratio (standalone) for the quarter, marginally improved to 39.4% as against 40.1 % to the corresponding quarter ended June 30, 2018.

Provisions rose by +59.4% on Y-o-Y basis and stood at Rs. 2,914.3 crore. The increase in provisions was mainly due to additional provisions for standard advances to the NBFC / HFC sector.

Capital Structure & leverage

Deposits grew by +9.3%/Rs. 95,33,774.3 crores. driven by growth in CASA deposits by + 12.8%. HDFC Bank enjoys low-cost deposit funding. Capital adequacy ratio (CAR) as per Basel III has improved to 16.9% from 14.6% on Y-o-Y basis. The regulatory requirement of CAR is 11.075%.Asset growth: Loan book witnessed a robust growth by +17.2%/ Rs. 7,51,385.8 crores. on Y-o-Y basis. The domestic loan mix between retail : wholesale stood at 54:46.

Asset Quality: (The details on asset quality on consolidated numbers is NA, hence the commentary is based on Standalone numbers for HDFC Bank.)

Gross non-performing assets (GNPA) deteriorated to 1.40% vis-a-vis 1.36% in 4Q FY’19. Net NPA deteriorated to 0.43% from 0.39% in 4Q FY’19.

Dividend: The Board of Directors has declared interim dividend of Rs. 15 per equity share and special dividend of Rs. 5 per equity share to commemorate 25 years of the Bank’s operations.

Shareholding pattern as on June 30, 2019:Final Take: Overall the Bank continues to enjoy its leadership position in India, as seen from the growth in the low cost deposits. The Bank has also reported stellar growth on the loan book front, with adequate diversification in retail and wholesale portfolio. The bank continues to report over 20% growth in NII & has been able to maintain 4.3% of NIMs over 11 quarters in a row.

However the overall economic slowdown now seems to be evident as the provisions rose. Further the asset quality marginally deteriorated as seen from the increase in GNPA’s & Net NPA’s.

*Consolidated Results: Includes HDFC Bank Standalone and its subsidiaries viz.

HDFC Securities Limited: is amongst the leading retail broking firms in India. As on June 30, 2019, the Bank held 97.3% stake in HSL. For the quarter ended June 30, 2019, HSL’s total income was Rs. 189.3 crore as against Rs. 193.5 crore for the quarter ended June 30, 2018. Profit after tax before other comprehensive income for the quarter was Rs. 66.5 crore, as against Rs. 72.6 crore in the previous quarter.
HDB Financial Services Limited (HDBFSL): is a non-deposit taking non-bank finance company (‘NBFC’) offering wide range of loans and asset finance products to individuals, emerging businesses and micro enterprises. As on June 30, 2019, the Bank held 95.5% stake in HDBFSL. As on June 30, 2019, HDBFSL’s balance sheet size was at Rs.58,833 crore. The gross loan book grew by 22. 7% to Rs. 56,287 crore as on June 30, 2019 (as against Rs. 45,889 crore as of June 30, 2018).

Technical Wise

As per the charts, Share is near DO or DIE situation of Rs 2360. A close below then stock will slide upto 2280-2250.Even in 1 Hour chart there is a formation of Bearish Flag, which indicates about the selling pressure but we have to wait for Monday opening, result can change the trend of share price, so better to wait for the opening on Monday, 1st hour is crucial, if is trades below 2380 then selling pressure will be there up-to 2325 levels.