We continue to remain positive on the company over medium to longer term perspective.
HDFC Bank reported net interest income growth of 22.9 percent in its Q1-FY20, driven by asset growth and a core net interest margin of 4.3 percent. Provisions stayed a tad higher at, up 38.3 percent QoQ. Earnings growth continues to stay healthy at 21 percent YoY .
Total advances at the end of Q1-FY20 came increase of 17.1 percent over Q1-FY19. Domestic advances grew by 17.9 percent over Q1-FY19 comprising of domestic retail loans which grew by 16.5 percent and domestic wholesale loans which grew by 19.6 percent. The domestic loan mix between retail and wholesale was 54:46. Overseas advances constituted 3 percent of total advances.
Total deposits at the end of Q1-FY20 came an increase of 18.5 percent over Q1-FY19. CASA deposits grew at 12.8 percent, resulting in CASA deposits comprising 39.7 percent of total deposits as at the end of Q1-FY20.
Provisions came in higher largely due to higher provisions for agri book & increased rate of provisions on unsecured book. The bank has also made contingent provisions of Rs 1650 million and Rs 860 million towards NBFC/HFCs, respectively. Overall asset quality marginally deteriorated with GNPA ratio at 1.4 percent, up 4 bps QoQ.
The bank stated it has been trying to push for deposit mobilization and hence, has been steadily increasing deposits to support loan book growth. Adjusting for the cash management-related inflows which are outside of the deposit accounts and the long-term institutional funding, credit-deposit ratio comes down to 75 percent.
Considering the strong positioning, healthy balance sheet growth and superior asset quality& management, we believe the bank is well poised to deliver consistently with margin leadership & robust return ratios.
We continue to remain positive on the company over medium to longer term perspective and maintain our buy rating on the stock with a target price of Rs 1410 per share.Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Are you happy with your current monthly income? Do you know you can double it without working extra hours or asking for a raise? Rahul Shah, one of the India's leading expert on wealth building, has created a strategy which makes it possible... in just a short few years. You can know his secrets in his FREE video series airing between 12th to 17th December. You can reserve your free seat here.