Tag: hdfc bank shares

Citi raises target price on HDFC Bank, BFSI News, ET BFSI

Banking & Finance

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Mumbai: Citi has opened a 90-day positive catalyst watch on HDFC Bank. The stock has underperformed both Nifty and Bank Nifty this year on concerns over growth, RBI restrictions and retail asset quality stress in the wake of COVID.

Citi said most of these concerns should get addressed starting from the second quarter of FY22. The brokerage has raised target price to Rs 1,900 from Rs 1,800 and retained a buy rating on HDFC Bank shares.

“New credit card issuance should accelerate as RBI has lifted the restrictions. We expect high yielding retail and SME loan growth to improve leading to higher NIM and credit costs to decline, driving healthy earnings and strong RoA (return on assets),” said Citi.

The brokerage has raised earnings estimates for FY22 by 2% and by 3% for FY23 to factor in better net interest margin and lower credit costs.

“We expect HDFC Bank to deliver strong earnings growth of around 24% CAGR (compounded annual growth rate) over FY21-23 and average return on equity of 18%. The stock trades at 3.4 times one year forward price to adjusted book, in line with its 5-yr/10-yr mean valuations,” said Citi.



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Shares of HDFC Bank rise as RBI lifts credit card ban, BFSI News, ET BFSI

Banking & Finance

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NEW DELHI: Shares in HDFC Bank Ltd jumped after the Reserve Bank of India (RBI) said it would allow the lender to issue new credit cards, partially removing a months-long ban.

The lender will roll out the preparations and strategies it has put in place to “come back with a bang” in credit cards, it said in a statement. It will also “continue to engage with RBI and ensure compliance on all parameters,” it said.

The stock gained as much as 3.4%, the most since May 21, after the bank confirmed the easing of curbs in a stock exchange filing Wednesday, following a Bloomberg News report. Shares were trading 0.6% higher at 1:55 pm in Mumbai.

Still, the central bank will retain a ban on the lender launching new digital products “until further review.”

While recommending a ‘buy’ for HDFC Bank given its attractive valuation, Jefferies India analyst Prakhar Sharma wrote that the bank needs to enhance investment in its technology capacities and strengthen backend monitoring. This will give the RBI greater comfort for lifting the remaining restrictions.

Online glitches

About eight months ago, the country’s most valuable lender was penalized by the RBI for repeated online glitches that hurt its 50 million customers. Following the curbs, the bank, India’s top credit card issuer, lost out to peers including State Bank of India, ICICI Bank Ltd and Axis Bank Ltd.

HDFC Bank’s credit card outstandings shrank by 6.5% in the June quarter from the previous three months, hurting its overall retail portfolio.

The bank has been in the process of setting up digital and enterprise units to strengthen its online infrastructure and handle a larger volume of transactions.

In February, the banking regulator appointed an external audit firm to look into the recurring outages.



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HDFC Bank reports 18% jump in net profit to Rs 8,758 crore; gross NPA ratio at 0.81%

Banking & Finance

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In terms of asset quality, HDFC Bank noted that gross and net non-performing assets were at 0.81% of gross advances and 0.09% of net advances.

India’s largest private sector lender HDFC Bank, today reported an 18.1% on-year rise in net profit during the fiscal third quarter. HDFC Bank’s standalone net profit stood at Rs 8,758 crore in the October-December quarter against Rs 7,416 crore in the same period last year. The bank’s net revenue was recorded at Rs 23,760 crore against Rs 20,842 crore from the year-ago period. On a consolidated basis, HDFC Bank’s net profit for the period under review was Rs 8,769 crore, against Rs 7,659 crore in the previous year.

HDFC Bank’s net interest income for the previous quarter grew 15.1% to Rs 16,317 crore helped by growth in advances, which was at 15.6%. The liquidity coverage ration of HDFC Bank was reported to be at 146%, well above the regulatory limit. Other income in the said period was at Rs 7,443 crore, 31.3% of the net revenue. 

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Pre-provisioning operation profit for the last quarter came in at Rs 15,186 crore, 17.3% higher on-year basis. HDFC Bank’s provisions during the quarter were Rs 3,414 crore of which Rs 691 crore were loan loss provisions while the reset was general provisions. Total deposits of the private sector lender were up 19% to Rs 12 lakh crore. Total advances as of December end stood at Rs 10.8 lakh crore an increase of 15.6%. Domestic advances grew 14.9%. 

Also Read: RBI open to examining bad bank proposal, says Shaktikanta Das; wants lenders to identify risks early

In terms of asset quality, HDFC Bank noted that gross and net non-performing assets were at 0.81% of gross advances and 0.09% of net advances. The lender said that if it had classified borrower accounts as NPAs despite the Supreme Court order to not declare accounts as NPAs, the gross NPA ratio would have been 1.38%. 

HDFC Bank’s net interest income and net profits for the third quarter the current fiscal year have beaten the estimates of at least three domestic brokerage and research firms. Shares of the lender continue to perform strongly on the bourses, even after having surged 38% in the last three months. Brokerage firm Motilal Oswal and Emkay Global have a ‘Buy’ rating on the scrip with a positive outlook.

Also Read: Rakesh Jhunjhunwala on selling spree; big bull cuts stake in Titan among other stocks

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