India's second largest private sector lender HDFC Bank 's first quarter net profit rose nearly 31%
year-on-year to Rs 1,417 crore, boosted by strong loan growth and increase in
other income.
In April-June, the bank's loans expanded by 21.5% to Rs 2.13
lakh crore. Consequently, the net interest income or the difference between
interest earned and paid out, shot up 22.3% to around Rs 3,500 crore. The
Reserve Bank of India projected 17% y-o-y credit growth for the entire industry
in 2012-13 on an average.
A CNBC-TV18 poll estimate predicted a net profit of Rs 1,411
crore and NII at Rs 3,444 crore.
Other income in the quarter jumped by 37% to Rs 1,530 crore.
The main contributor to other income for the quarter was fees and commissions
of Rs 1,140 crore while foreign exchange and derivatives added Rs 315 crore
revenue.
“Our loan disbursals will grow 2-3% faster than the industry
in FY13. We expect the net interest margin to remain around 4%. There is no
stress on our loans given to sectors like textile and power. Exposure to power
sector companies would be around 2.3%. We are not looking any acquisition
immediately,” the HDFC Bank management told reporters on the sidelines of its
annual general meeting. Moreover, it did not find any need to tweak its savings
deposit rates.
The bank has been growing at 30% per year on an average in
the last few years. While some cast aspersions on such consistent growth,
others view it as an outcome of conservative/prudent management.
"In FY12, the bank's could have grown more than
30%," Vaibhav Agrawal, vice-president - equity research, Angel Broking
told moneycontrol.com.
"However, it deliberately went slow on growth. The
lender chose to create a provision buffer of Rs 700 crore last year. This will
act as a cushion in bad times. Even if, it does not repeat the same (buffer),
still HDFC Bank can very much achieve 30% growth in net profit in FY13 as well.
Given the current gloomy environment, this growth rate is quite
significant," he said.
Meanwhile, there was a minor change in the composition of
loan book. The ratio of credit between the corporate and retail was at 52:48 as
against 54:46 in the Jan-March quarter. Credit cards (a form of unsecured
loan), personal, auto and construction equipment loans contributed majorly to
the share of retail advances. However, the increase in corporate share lending
was a bit surprising.
On asset quality front, the bank has shown resilience even
though the number of bad loans are going up for the entire industry. Its gross
non-performing asset (NPA) ratio improved to 0.97% in Q1 as against 1.02% in
Jan-March. The net NPA ratio remained unchanged at 0.2% during the same period.
Total restructured loans were minimal at 0.30% of gross advances.
Total deposits grew at 22% from a year ago to around Rs 2.58
lakh crore. The share of current account
and savings account (CASA) stood at 46%. The bank managed to post more than 18%
growth in savings deposits despite the fact that it has not tweaked its savings
rate since RBI's deregulations of savings deposits. Capital adequacy ratio
stood at 15.5% as against 16.5% quarter-on-quarter.
HDFC Bank shares on Friday rose more than 1% to close the
day at Rs 586 on NSE. In the last 12 months, the stock surged nearly 18% as
against a fall of 4% in the Bank Nifty.
According to analysts tracking the bank, earnings growth was
due to its robust asset quality and better management capabilities. However,
they do not foresee much upside for the scrip from here on as it is now fairly
valued - a polite way of saying that it is overvalued.
"It is acting as a defensive stock especially when most
of the banking stocks are being hammered. Investors should hold on their
investment in the HDFC Bank," said a banking analyst.
Source: www.moneycontrol.com
Thanks,
Gaurav Agarwal
Head Dealer
DENIP Consultants Pvt Ltd
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