Bank Results season: What’s so great about HDFC Bank(Q3 2012)?

Headline results at Gross NPAs up to INR 22.02 bln from below 20 bln last quarter and a NIM of 4.1% with Gross NPAs down to 1.03% vs 1.11%

December 2011 gross income topline has come to INR 86.22 bln or 7.5% up on quarter. September 2011 had grown income to $1.6 bln by Indian GAAP or nearly INR 79.5 bln up 37% from September 2010 despite the bad credit conditions that actually meant INR 30 bln in NII and INR 12 bln in Other income ( Fee  and non interest income) at 4.1%.

October saw a marginal pullback in credit figures as well NII growth should be closer to 20% as the bank has grown assets in the new quarter and NIM is good at 4.1% As I expected, Cost income ratio has come down from 48.7% with Loan income at two thirds, of the total topline, branch costs should be controlled to lower 40% levels

Net interest income at INR 31.16 bln and Other income at INR 14.20 bln are also thus higher on September but NII has a yoy growth of 12% down from 16% in September  YOY growth in total income (Indian GAAP) and profits is nearly 35%

Net Profits increased to INR 14.29 bln up 19% on quarter reflecting the seasonal growth in October, year on year growth close to 40% while growing Provision Coverage Ratio to 80% against the required 56% improving Cost Income to 46.7% despite 420 new branches from last year December and 340 were new cities in the bank’s distribution network. ATMs grew from 5000 to 7110.

Deposit growth of 21% on the year despite a CASA of 47.7% and interest rates having plateaued at a peak of around 9.5% and 11% (less than 1 year lending) CASA deposits are now INR 700 bln maintaining the Sept 30 figure of INR 690 bln. Tier I ratio is 11.2% before 3Q profits CASA and other deposits had grown 6.5% and 13% from the June quarter and have not gone down since

Provisions are lower by 50% at INR 3.29 bln Retail is 51% of the book and wholesale 49% with retail loans having grown in the latest quarter at 29% yoy against 15% in wholesale as the bank shuts down ipon its short and medium term lending to reduce risk

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