Q4FY22 results: Impressive credit drawdown; stable margins
The brokerage said the bank reported a decent overall performance. Explaining in detail, the brokerage said: “Overall operating performance was decent with NII growth of 10.2% YoY and 2.3% QoQ to Rs 18,872 crore, NIMs declined 20 bps YoY and 10 bps QQ. This was due to a shift to secured loans and higher rated borrowers, which generally offer lower yields. Other income was down 6.7% quarter-on-quarter and were flat year-on-year due to lower treasury income Fee income was up 12% year-on-year, but was lower than loan growth P/I ratio increased slightly declined up 37% to 38.3% QoQ as costs rose slightly faster than revenue Provisions for the quarter were up 10.6% year-on-year as the bank continued to add contingent provisions to worth Rs 1000 crore to his kitty. However, on an annual basis, provisions decreased 29%. Thus, as a result, the PAT for the quarter was | 10,055 crores, up 22.8% year-on-year. Asset quality improved sequentially, with GNPA and NNPA ratios falling 9 bps and 5 bps QoQ to 1.17% and 0.32%, respectively, while the restructured portfolio was at 114 bps loans versus 134 bps the previous quarter. Business growth was strong in this quarter as loans increased by 8.6% QoQ and 20.8% YoY to Rs 13.7m and traction was driven by the segment business up 12% qoq, agriculture up 15% qoq, and 9% up in the MSME segment. Deposit growth was also healthy at 16.8% YoY and was driven by a 22% YoY increase in CASA.”
Main triggers of future price performance
Explaining the key drivers of future price performance, the brokerage in its latest report said, “Strengthening franchisee liability would help contain the cost of funding in a rising interest rate scenario. “
Brokerage maintains Buy rating for target price of Rs 1,650
According to the brokerage, “HDFC Bank’s share price has risen more than 70% over the past five years. We believe the merger could lead to increased volatility. However, the recent correction provides a good opportunity entry given the strong and consistent type of franchise. HDFC Bank has been. We remain positive and maintain our BUY rating on the stock. He added: “We are lowering our target multiple on HDFC Bank to ~3x FY24E ABV & Rs 50 for subsidiaries; thus reducing our TP from Rs 2000 to Rs 1650.”
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