HDFC Bank's ADRs Fall Most In Nearly Two Years After Q3 Results
The ADR fell as much as 6.79% lower at $61.13 the most since April 18, 2022.
The U.S.-listed shares of HDFC Bank plunged nearly 7% after the private lender announced its third quarter results.
The ADR fell as much as 6.79% lower at $61.13 the most since April 18, 2022.
Net profit for the quarter stood at Rs 16,373 crore in the October–December period, as compared with Rs 15,976 crore in the previous quarter. Analysts polled by Bloomberg estimated a net profit of Rs 15,763 crore for the quarter.
Figures are not comparable year-on-year as HDFC Bank concluded the merger with Housing Development Finance Corp. in July 2023.
Core net interest margin for the bank stood at 3.4% as of Dec. 31, and at 3.6% on an interest earning assets basis. The numbers remained flat sequentially.
HDFC Bank Q3 Highlights (QoQ)
Net profit: Rs 16,373 crore vs Rs 15,976 crore.
Net interest income: Rs 28,471 crore vs Rs 27,385 crore.
Gross NPA: 1.26% vs 1.34%.
Net NPA: 0.31% vs 0.35%.
Capital adequacy ratio: 18.39% vs 19.54%.
The rise in HDFC Bank's bottom-line was weighed down by a significant rise in provisions during the quarter. Provisions rose to Rs 4,216.6 crore in the reporting quarter, up 50% year-on-year. The provision number for the quarter is inclusive of contingent provisions worth Rs 1,212 crore.
The contingent provisions are on account of investments in alternative investment funds, said Srinivasan Vaidyanathan, CFO at HDFC Bank.
Here's What Brokerages Have To Say
Analysts suggest that HDFC Bank's third-quarter results show key indicators related to liquidity and deposits, pointing to a potential diminishing visibility on growth.
Bernstein Research
Bernstein research has a 'buy' rating with a target price of Rs 2,200
Disappointment on both metrics that mattered: LDR and NIM change
Despite higher LDR & increase in loan to asset, NIM was unchanged
Another quarter of EPS decline and premium for steady EPS growth will be questioned
Cost to income unchanged, provision expenses increased due to one-off impact
Bank took lower tax expense route to maintain 2% ROA.
Motilal Oswal Financial Services
The research firm has a 'buy' with a target price of Rs 1,950.
HDFC Bank reported an in-line earnings led by healthy other income and steady loan growth
Margins stood largely flat; significantly drew down the LCR ratio
NIMs will improve gradually over the coming years.
On Tuesday, shares of HDFC Bank rose 0.42% to Rs 1678.95 apiece on the BSE, even as the benchmark Sensex ended the day 0.27% lower at 73,128.77 points. The quarterly results were declared after market hours.
