HDFC Bank - Q3FY13 Results Review First Cut - Systematix

HDFC Bank Ltd reported its Q3FY13 results. Reported Net Profit stood at Rs 18.6 bn, an increase of 30% yoy and 19% qoq , which is 1.2% ahead of the our estimates.

Key highlights - strong business growth, fall in margins and marginally disappointing asset quality.

- Interest Income grew by 20.9% yoy, which is 0.4% ahead of our estimates and NII too posted strong growth of 21.9% yoy - 1.3% lower than our estimates.

- Reported margins of the bank have come off by 10 bps qoq to 4.1% from 4.2%

- Business growth surprisingly strong - Advances of bank posted healthy growth of 24.3% yoy and 42% qoq to Rs2415 bn. Similarly, deposits too recorded growth of 22.2% yoy and 3.6% qoq to Rs2841 bn.

- Other income showed grew at healthy pace of 26.7% yoy and 33.7% qoq to Rs18 bn.

- Asset quality starts disappointing - in line with our expectations - HDFC Bank was the only bank so far which had maintained sound asset quality despite macro stress. This seems to have changed from this quarter - Gross NPAs in absolute terms increased by 14% qoq (20.4% yoy) to Rs24.3 bn. In % terms, gross NPAs increased to 1% from 0.9% in Q2FY13. PCR came off marginally from 82% to 80% qoq.

- Overall, despite strong profitability growth, asset quality is witnessing signs of weakness. Currently, we have HOLD rating on stock (TP 636).

Source : Equity Bulls

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