November 01, 2016 / 17:27 IST
Axis Direct's research report on HDFC Bank
HDFC Bank reported an inline Q2 across line items, with PAT of Rs 34.6 bn (up 20.4% YoY) and stable asset quality (GNPLs at 1.02% vs. 1.04% in Q1FY17). Loan growth slowed down to 18% YoY against recent normal run-rate of 22%+ (but still 2x the industry average). NIM declined 20 bps QoQ to 4.2% but is still among the best with CASA ratio largely stable at 40.4% (up 53 bps QoQ).
Core fee income remains tepid at 13% YoY keeping the other income growth muted at 14% YoY. We believe fee income would revive in ensuing quarters led by pick up in credit growth and significant investment in branches in the past few years. HDFC Bank is one of our preferred picks, and we remain constructive owing to its pristine asset quality, retail franchise and best in class profitability.
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