HDFC Bank: reported significant growth in Q2FY23

HDFC Bank, India’s largest private sector lender, has reported significant growth in its financial metrics for the September quarter. Here’s a summary of the key highlights:

Advances Growth:

• HDFC Bank’s gross advances grew by an impressive 57.7% year-on-year (YoY) in the September quarter.
• The bank’s gross advances amounted to approximately Rs 23,54,500 crore as of September-end, representing a YoY growth of 57.7% and a quarter-on-quarter (QoQ) growth of 44.4%.
• After accounting for transfers through inter-bank participation certificates and bills rediscounted, the bank’s advances grew by around 60% YoY and 43% QoQ.

Loan Segment Performance:

• Domestic retail loans recorded remarkable growth, increasing by 111.5% YoY.
• Commercial and rural banking loans saw a solid growth of around 29.5%.
• Corporate and other wholesale loans also grew, albeit at a slightly lower rate, with an approximately 8% growth.

Deposit Growth:

• HDFC Bank’s deposits grew by about 29.9% YoY and 13.6% QoQ, aggregating to approximately Rs 21,73,000 crore.
• The bank’s CASA (Current Account Savings Account) deposits amounted to approximately Rs 81,7500 crore as of September-end, showing a YoY growth of around 7.6% and a QoQ growth of 0.6%.

CASA Ratio:

• HDFC Bank’s CASA ratio stood at around 37.6% as of September 30, 2023, compared to 45.4% in the same period in the previous year (September 30, 2022), and 42.5% as of June 30, 2023.

Home Loan Disbursals:

• The bank reported its best-ever home loan disbursals during the first quarter post-merger, amounting to Rs 48,000 crore.
• This represented a 14% growth over the quarter ending June 30, 2023, and a 10.5% growth over the quarter ending September 30, 2022.

Stock Performance:

• HDFC Bank shares, which had experienced a 3% loss in the preceding two weeks, traded 0.4% higher following the release of the quarterly business update, reaching Rs 1,514 on the BSE.

Leadership Overhaul:

• HDFC Bank has implemented a leadership overhaul, particularly in the retail loans segment, dividing it into mortgage and non-mortgage segments.
• This restructuring includes appointing two group heads and two regional heads for branch banking, aimed at bolstering liability growth, a crucial investor metric.

Analyst Opinions:

• Despite a downgrade from global brokerage firm Nomura due to merger-related concerns, Jefferies has retained a buy rating on HDFC Bank, with a target price of Rs 2,030.
• Jefferies cited the bank’s emergence as the 7th largest bank globally and its attractive valuation, with a positive outlook on its retail asset portfolio, improving deposit franchise, merger synergies with parent HDFC, and branch expansion supporting deposit growth. The bank is expected to deliver 16-17% earnings growth over the next three years.

HDFC Bank’s robust growth in advances and deposits, coupled with its strategic restructuring, indicates its continued focus on expansion and profitability in the Indian banking sector.

Follow this post also: HDFC Bank