HDFC Bank Stupendous June Quarter Numbers

On 13^th July 2012, HDFC bank declared its robust June quarter numbers which were in line with the D -streets expectations. The bank continued its outstanding performance by maintaining its asset quality at the best levels, showing sustainable margins and by posting 30 per cent plus growth for the quarter on YoY basis.

HDFC bank has now posted a YoY growth of more than 30 per cent for last 30 plus quarters. For the June quarter of 2012, Net Interest Income (NII) grew by 22 per cent to Rs 3484 crore, while the Net profit of the bank increased by 30.63 per cent to Rs 1417 crore on YoY basis. The following the key financial parameters of the bank.

In this uncertain environment, when most of the banks are facing issues on the asset quality front, HDFC bank is still insulated from the difficult situation. Bank continued to maintain its NPA at lower levels and which stands amongst the best in the Industry. For the June 2012, Gross NPA of the bank improved while Net NPA remaining stable at 0.2 per cent. Gross NPA of the bank decreased by 7 basis points to 0.97 per cent. Further the provision coverage ratio (PCR) for the June 2012 stood at 81 per cent against 83 per cent in the similar period last year. We continue to believe that bank has strong and good asset quality which will not deteriorate even in future.

Net Interest Margin (NIM) showed an improvement of 10 basis points to 4.3 per cent which was a positive surprise for the markets. Improving NIM is definitely commendable in this kind of volatile environment. As on 31^st March 2012, Capital Adequacy Ratio (CAR) of the bank stood at 15.5 per cent with Tier 1 CAR staying at 10.9 per cent.

On the business front also bank saw a stupendous growth which is well above the industry growth. Total deposit increased by 22 per cent to Rs 257531 crore (RBI forecast of 16 per cent) while Total Advances grew by 21.5 per cent to Rs 213338 crore (RBI forecast of around 17 per cent).

On the segmental front, Revenue from Treasury segment increased by 52 per cent to Rs 2516 crore and the net profit grew by 263 per cent to Rs 67 crore. Wholesale and Retail banking segments also performed well during the June quarter which lifted the bottom line of the company.

In conclusion, we believe the HDFC bank performed extremely well during the quarter. We had recommended HDFC bank to our readers in “Where To Invest In 2012”. Since then the stock is up around 25 per cent and at present also we continue to believe that the bank will keep growing in similar fashion going ahead.

On the valuation front, HDFC is available at the Price to Book value of around 4.43 times which seems to be reasonable since it is one of leading private banks and has shown excellent financial performance. We continue to remain bullish on the counter and one could invest in the scrip keeping with long term horizon.