*HDFC Bank Q2FY22 Concall Update*
(Nirmal Bang Securities)
• _*Overall stable performance*_
• _*Rise in restructured book is slightly disappointing although contingent provision buffer is adequate*_
• _*Strong growth outlook particularly for Rural & SME segments fuels our optimism*_
*Outlook: Positive in long term*
• Slippage ratio came at 1.8% vs QoQ 2.5%. Average over FY18-20 (pre-covid) was at 1.8%.
• Demand resolution is at 97.5% against precovid level of 98%. Recovery rates are higher than precovid levels.
• Gross NPA came at 1.35% vs QoQ 1.47%. Net NPA came at 0.40% vs QoQ 0.48%.
• Restructured loans are at ~Rs. 18,000 Cr (1.5%) vs QoQ ~Rs. 7,800 Cr (0.7%). Bank expects 10-20 bps to slip into NPA.
• Provisions came at Rs. 3925 Cr (1.40%) vs expectation of Rs. 4157 Cr (1.49%), YoY Rs. 3703 Cr (1.53%), QoQ Rs. 4831 Cr (1.80%).
• Provision made during the qtr includes Rs. 1200 Cr towards contingent provisions taking total contingent provisions to Rs. 7756 Cr (65bps) vs QoQ Rs. 6596 Cr (57 bps).
• Also total provisions (specific + floating + contingent) are 163% of GNPA.
• Total advances increased by 4.5% QoQ & by 15% YoY to Rs. 11,98,837 Cr.
• Retail loans grew +4.5% QoQ; +11% YoY.
• Sep month saw 37% decline in overall auto sales; while disbursals for HDFC Bank grew by 36% in the same month.
• Disbursal run-rate for 4W is robust and 2W is lagging but runrate should reach pre-covid levels over next 60 days.
• Co gained market share in CV financing. Growth in e-commerce and infra spends by Govt should drive growth in CVs.
• Home & LAP are witnessing good QoQ growth.
• *Expansion continues in semi-urban & rural areas.* Rural economy is stable with normal monsoon. Employment levels have reached pre-covid levels as per CMIE data. Mobility index has shown good improvement.
• *SME loans grew by 7.5% QoQ.*
• *Rural & SME books should grow at a fast pace.*
• Recovery in consumption & exports will drive higher utilization levels and thus higher growth in wholesale book.
• NIMs remained constant both on QoQ & YoY basis at 4.1%.
• NII grew by 12% YoY.
• Other income grew by 21% YoY on the back of a low base as covid 1 lockdown was much more stricter and thus this qtr, fee income grew faster.
• Total income grew by 15% YoY. While opex and PPP grew by 14 & 15% respectively.
• CASA ratio improved to 46.8% vs QoQ 45.5% & YoY 41.6%.
• HDB Financial loan book was at Rs. 60,008 Cr (+4.6% QoQ & flat YoY). Credit cost in HDB remained elevated at 4.2% vs QoQ 3.3% & YoY 6.2%. GNPA reduced to 6.1% vs QoQ 7.7%.
Share is trading at P/E of 21.2x FY23E EPS & 4.4x trailing P/Adj. BV
(Nirmal Bang Securities)
• _*Overall stable performance*_
• _*Rise in restructured book is slightly disappointing although contingent provision buffer is adequate*_
• _*Strong growth outlook particularly for Rural & SME segments fuels our optimism*_
*Outlook: Positive in long term*
• Slippage ratio came at 1.8% vs QoQ 2.5%. Average over FY18-20 (pre-covid) was at 1.8%.
• Demand resolution is at 97.5% against precovid level of 98%. Recovery rates are higher than precovid levels.
• Gross NPA came at 1.35% vs QoQ 1.47%. Net NPA came at 0.40% vs QoQ 0.48%.
• Restructured loans are at ~Rs. 18,000 Cr (1.5%) vs QoQ ~Rs. 7,800 Cr (0.7%). Bank expects 10-20 bps to slip into NPA.
• Provisions came at Rs. 3925 Cr (1.40%) vs expectation of Rs. 4157 Cr (1.49%), YoY Rs. 3703 Cr (1.53%), QoQ Rs. 4831 Cr (1.80%).
• Provision made during the qtr includes Rs. 1200 Cr towards contingent provisions taking total contingent provisions to Rs. 7756 Cr (65bps) vs QoQ Rs. 6596 Cr (57 bps).
• Also total provisions (specific + floating + contingent) are 163% of GNPA.
• Total advances increased by 4.5% QoQ & by 15% YoY to Rs. 11,98,837 Cr.
• Retail loans grew +4.5% QoQ; +11% YoY.
• Sep month saw 37% decline in overall auto sales; while disbursals for HDFC Bank grew by 36% in the same month.
• Disbursal run-rate for 4W is robust and 2W is lagging but runrate should reach pre-covid levels over next 60 days.
• Co gained market share in CV financing. Growth in e-commerce and infra spends by Govt should drive growth in CVs.
• Home & LAP are witnessing good QoQ growth.
• *Expansion continues in semi-urban & rural areas.* Rural economy is stable with normal monsoon. Employment levels have reached pre-covid levels as per CMIE data. Mobility index has shown good improvement.
• *SME loans grew by 7.5% QoQ.*
• *Rural & SME books should grow at a fast pace.*
• Recovery in consumption & exports will drive higher utilization levels and thus higher growth in wholesale book.
• NIMs remained constant both on QoQ & YoY basis at 4.1%.
• NII grew by 12% YoY.
• Other income grew by 21% YoY on the back of a low base as covid 1 lockdown was much more stricter and thus this qtr, fee income grew faster.
• Total income grew by 15% YoY. While opex and PPP grew by 14 & 15% respectively.
• CASA ratio improved to 46.8% vs QoQ 45.5% & YoY 41.6%.
• HDB Financial loan book was at Rs. 60,008 Cr (+4.6% QoQ & flat YoY). Credit cost in HDB remained elevated at 4.2% vs QoQ 3.3% & YoY 6.2%. GNPA reduced to 6.1% vs QoQ 7.7%.
Share is trading at P/E of 21.2x FY23E EPS & 4.4x trailing P/Adj. BV