NII seen at Rs201.0 billion, PAT at Rs104.5 billion

Result date: 15The tenth October 2022
Recommendation: buy
Target price: 1,950 rupees

HDFC Bank reported healthy loan growth for the quarter ended September 30, 2022. This growth was led by strength in CRB and wholesale loans. The bank’s loan book grew 23.5% compared to the same quarter last year. Deposit growth continued at 19% compared to the same quarter last year, but the CASA rate fell 40 basis points sequentially to 45.4%.

HDFC Bank’s net interest income (NII) could grow 14% compared to the same quarter last year and 3%, respectively. Growth in non-interest income could lag that at the National Insurance Institute, resulting in total income growth of 10% year-over-year (7% growth qoq).

Net interest margin is expected to improve sequentially with the previous quarter, but higher wholesale growth and lower checking and savings accounts could limit the improvement. Asset quality is expected to remain benign (total NPA estimated at 1.3% vs. 1.4% in the last year quarter).

Provisions are likely to decline over the course of last year’s quarter and sequentially. Thus, the bank’s earnings after tax or PAT can grow at a higher pace compared to the baseline.

Important management insights to watch out for:

  • Demand for credit across major sectors
  • Asset Quality Trends
  • Updates on integration with HDFC

rupee. Billion

September 2022 estimates

QoQ change

Annual change
net interest income 201.0 3% 14%
Gross income 277.1 7% 10%
Advance operating profit savings 166.5 8% 5%
provisions 28.0 (12)% (29)%
Profit after tax 104.5 14% 18%
loans 14800 6% 23%
deposit 16,735 4% 19%

Source: Inc., IIFL Research