HDFC Bank Q3 Results Review - Margins Flat, Lower Tax Rate, Treasury Gains Boost Earnings: Systematix

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Research Report.HDFC Bank Ltd. reported earnings of Rs 163 billion (+3% QoQ, +34% YoY) which was beat to estimates of Rs 157 billion led by lower tax rate on tax provision reversals and higher non-interest income. Key highlights for the quarter were:Gross advances growth of 4.9% QoQ was led by strong growth in commercial and rural banking (+7.3% QoQ) and retail loans (+3.3% QoQ) and muted growth in wholesale loans (+0.8% QoQ) and agri (+2.8% QoQ). While deposit growth was muted (+1.9% QoQ), quality of deposit accretion improved as retail deposit mix improved to 84% (+100 basis points QoQ) and current account and savings account ratio also remained stable at 37.7% (+10 bps qoq)core net interest margin as % of IEA remained largely stable QoQ at 3.6% versus expectation of decline on muted deposit accretion. This was mainly due to utilisation of balance sheet liquidity to fund advances growth. With liquidity coverage ratio coming down to 110% from 120% QoQ, incremental growth will have to be deposit funded.Other income was supported by higher treasury gains of Rs 15 billion (versus Rs 10 billion in Q2 FY24) mainly on the back of gain on stake sale in Bandhan bank While CIR remained stable QoQ, HDFC Bank is now considering a more gradual roll-out in branches with expectation of 800-1000 new branch additions in FY24 versus earlier target of 1500 branches. In our view, while abundant liquidity and benign asset quality conditions hitherto enabled the bank to increase its investment outlay, this change of stance could be a sign of the pressures on return ratios in the face of competition for cheap sources of liquidity. Gross non-performing /net- non-performing asset at 1.3%/0.31% was stable QoQ. The bank provided an additional Rs 12 billion, reflecting 100% provision for downstream AIF investments as per the new regulatory requirements. Overall, the bank delivered return on asset of 1.9% versus FY24 guidance of 1.9-2.1% for the merged entity..Click on the attachment to read the full report:.HDFC Bank Q3 Results Review - Inline; Margins Flat QoQ: Motilal Oswal.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

HDFC Bank Q3 Results Review - Margins Flat, Lower Tax Rate, Treasury Gains Boost Earnings: Systematix

We remain enthused about the medium-term prospects for the bank and view the quarterly results as signposts towards building a truly pan India, rural and urban focused bank.

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HDFC Bank Q3 Results Review - Margins Flat, Lower Tax Rate, Treasury Gains Boost Earnings: Systematix

We remain enthused about the medium-term prospects for the bank and view the quarterly results as signposts towards building a truly pan India, rural and urban focused bank.

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