January 25, 2017 / 17:24 IST
HDFC Bank’s Q3FY17 PAT at INR 38.6bn (up 15% YoY), though broadly in line, came below historical trend. NII grew 18% YoY (optically lower given redemption of loans linked to FCNRB of USD2bn; else 20% YoY still below historical trend). However, core fee softened further to <10% YoY, straining core revenue momentum (up < 15% YoY versus 24-25% earlier). Asset quality continued to be stable (GNPLs at 1.05%). Meanwhile, strong CASA growth (>20% QoQ) propelled CASA ratio to 45%, reflecting strong franchise.
Outlook
Persistent pressure on revenue and limited opex & credit cost levers indicate that the bank is moving towards a normalised earnings trajectory of 15-17% growth. Hence, we prune FY17/FY18E EPS by 2/7%. Best-in-class liability franchise and marginal stress baggage (nil 5:25 refinancing & SDR) lend comfort. Maintain ‘BUY’.
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