HDFC Bank gains 5% on strong Q1 performance

MUMBAI : Shares of HDFC Bank rose as much as 4.87% after it reported nearly 19.58% jump in its net profit to â‚¹6,658.62 crores for the quarter ended 30 June against, â‚¹5568.16 crores for the same quarter last year.

At 11:48 am, HDFC Bank was trading at â‚¹1134.15 up 3.18% from its previous close, while the benchmark Sensex gained 0.6% to 37,250.67 points.

HDFC Bank's Total income increased 6.46% to â‚¹34,453.28 crore in Q1 June 2020 versus â‚¹32361.84 crores in Q1 June 2019.

Net interest income (NII) (interest earned less interest expended) for the April-June quarter jumped 17.8% to â‚¹15,665.4 crores as compared to â‚¹13,294.3 crores in the same quarter of the previous fiscal.

"HDFC Bank has been able to deliver its usual earnings growth trajectory, the pandemic has induced volatility on certain operating parameters like fee income and opex and in turn has heavily dented loan origination across retail segments. Overall performance of the bank should remain steady expect the bank to offset near-term pressure on other income via tight control over opex as it maintains higher liquidity to navigate through the crisis," Analysts at Motilal Oswal said in a note. The brokerage has a buy rating on the stock.

HDFC Bank's ratio of gross NPAs to gross advances stood at 1.36% as on 30 June 2020 as against 1.26% as on 31 March 2020 and 1.40% as on 30 June 2019. The ratio of net NPAs to net advances stood at 0.33% as on 30 June 2020 as against 0.36% as on 31 March 2020 and 0.43% as on 30 June 2019.

The bank's provisions and contingencies jumped 48.89% to â‚¹3,891.52 crores in Q1FY21 from â‚¹2,613.66 crores in Q1FY20.

"Net Interest Income growth of 18% and a decline in core fees were largely in-line with our expectations. Credit cost was elevated at 1.6% as the bank augmented contingent provisions by â‚¹1000 crore, made accelerated provisions on upfront slippages and raised overall core provision coverage ratio to 76%, the Bank continues to accrete capital led by lower risk intensity of incremental growth and sustained high profitability, raised FY2021/2022 EPS estimates by 9%/6% with positive tweaks to growth, opex and credit cost assumptions," said analysts at Yes Securities. The brokerage has a buy rating on the stock.

Total deposits of the bank as of 30 June 2020 stood at â‚¹1,189,387 crore, registering a 24.6% y-o-y jump. Total advances as of 30 June 2020 were â‚¹10,03,299 crore, an increase of 20.9% Y-o-Y over 30 June 2019. Domestic advances soared 21% Y-o-Y over 30 June 2019.

From the beginning of the year, HDFC Bank lost 11% against a drop of 10% in the benchmark index, Sensex. From March lows, the stock gained 54% while Sensex was up 45%.