HDFC Bank (HDFCB IN) - i.marketsmojo.com · HDFC Bank recently organized an analyst meet where the...

May 15, 2018 1

Nitin Kumar [email protected] +91-22-66322236

Pritesh Bumb [email protected] +91-22-66322232

Rating BUY

Price Rs1,966

Target Price Rs2,251

Implied Upside 14.5%

Sensex 34,465

Nifty 10,564

(Prices as on May 15, 2018)

Trading data

Market Cap. (Rs bn) 5,101.0

Shares o/s (m) 2,595.0

3M Avg. Daily value (Rs m) 2868.5

Major shareholders

Promoters 25.60%

Foreign 40.43%

Domestic Inst. 14.97%

Public & Other 19.00%

Stock Performance

(%) 1M 6M 12M

Absolute 6.9 6.2 34.5

Relative 2.4 (0.2) 17.3

How we differ from Consensus

EPS (Rs) PL Cons. % Diff.

2019 81.4 82.6 -1.4

2020 98.1 100.5 -2.4

Price Performance (RIC: HDBK.BO, BB: HDFCB

IN)

Source: Bloomberg

0

500

1,000

1,500

2,000

2,500

Ap

r-1

7

Jun

-17

Au

g-1

7

Oct

-17

De

c-1

7

Feb

-18

Ap

r-1

8

(Rs)

Rating: BUY | CMP: Rs2,022 | TP: Rs2,251

Remains a India growth story

HDFC Bank recently organized an analyst meet where the analyst got an

opportunity to meet up with heads of different business verticals. Some of

the key takeaways were (i) the bank is present across segments &

geographies with special focus on semi-urban (ii) unsecured loan growth has

been on improved TAT from digital & analytics but same also helps

constantly in tight monitoring and (iii) each business segment is

independently linear. We continue to believe HDFCB will continue to grow its

market share across segments maintaining its leadership and delivering

steady profitability across cycles. Retain BUY with TP of Rs2,251 based on

4.3x Mar-20 ABV.

Dominance as market leader has led to sustained growth: HDFCB remains

dominant in most of its product segments like Government business flow,

transactions market shares on retail & corporate, loan & liabilities market share

and product cross sell. This has helped the bank continuously grow its balance

sheet at +20% CAGR in last many years. Also, in recent years’ investment in

technology (see exhibit 9) and use of it for analytics has helped reach in some

product segments to much higher levels at faster rate.

Digital helping to foster growth in unsecured segment: Unsecured portfolio

mix (CC & personal loans) has gained 500bps in last 5 years and is now 16.5%

of overall loans and has been helped digital & technological advancement with

TAT as low at 10 secs and stands as a cross sell to existing liability customer

(70-75% internal) and bank continues to see lower delinquencies even at 60

dpd (exhibit 5).

Wholesale selective but more focused on emerging corporates group:

Blamed of not participating in infra lending, the bank clearly explained the bank

philosophy of continuing to finance more viable and profitable projects and has

been actively participating especially through transaction banking, debt

origination (top 3 in league tables) and equity issuance. But Bank remains more

focused on emerging corporates especially in urban & semi-urban areas with

Rs1.0bn-10.0bn turnovers which should provide much higher push and

improve market leadership

Liabilities remains key cross sell area: Bank has 29% SA as salaried

segment (from public disclosures), but bank incrementally has been sourcing

higher self-employed SA as a key strategy for cross selling of products like

mortgages, digital linked products. Also bank has been quite active in offering

the TPP products which is 14-15% of core fee income (FY17 public

disclosures) and mainly led by life insurance products.

HDFC Bank (HDFCB IN)

May 15, 2018

Analyst Meet Update

Change in Estimates | Target | Reco

Change in Estimates

Current Previous

FY19E FY20E FY17E FY18E

Rating BUY -

Target Price 2,251 -

NII (Rs m) 4,78,842 5,73,698 - -

% Chng. - -

Op. Profit (Rs m)3,87,477 4,60,334 - -

% Chng. - -

EPS (Rs) 81.4 98.1 - -

% Chng. - -

Key Financials

FY17 FY18 FY19E FY20E

NII 3,31,392 4,00,949 4,78,842 5,73,698

Op. Profit 2,57,324 ,26,687 3,87,477 4,60,334

PAT 1,45,496 1,75,306 ,11,309 2,54,619

EPS (Rs.) 57.2 68.0 81.4 98.1

Gr. (%) 17.0 18.9 19.8 20.5

DPS (Rs.) - 10.9 13.0 16.0

Yield (%) - 0.5 0.6 0.8

NIM (%) 4.1 4.2 4.1 4.2

RoAE (%) 17.9 17.9 18.4 19.1

RoAA (%) 1.8 1.8 1.8 1.9

P/BV (x) 5.8 4.9 4.3 3.7

P/ABV (x) 6.1 5.2 4.6 3.9

PE (x) 35.4 29.7 24.8 20.6

Key Data HDBK.BO | HDFCB IN

52-W High / Low Rs.2,027 / Rs.1,541

Sensex / Nifty 35,557 / 10,807

Market Cap Rs.5,250bn/ $ 77,764m

Shares Outstanding 2,597m

3M Avg. Daily Value Rs.5317m

Shareholding Pattern (%)

Promoter’s 25.60

Foreign 40.43

Domestic Institution 14.97

Public & Others 19.00

Promoter Pledge (Rs bn)

Stock Performance (%)

1M 6M 12M

Absolute 5.0 12.3 30.1

Relative 1.0 3.5 11.0

R Sreesankar

[email protected] | 91-22-66322214

Pritesh Bumb


Vidhi Shah


HDFC Bank

May 15, 2018 2

Key Takeaways from Interaction with Mr. Aditya Puri

Macro Outlook:

Global - Do not see the INR/US$ to going beyond Rs70 and should see

stability at 65-70 levels; however, in the medium term see some temporary blip.

No major impact on Indian economy on oil prices front on cancellation of Iran

–US deal.

Indian economy - CAD of 2% and fiscal deficit of 3.5% has largely been priced

in. Expect GDP to be around 7.3-7.5%, while inflation should be see some

increase in near term but should be demand led. Demand will exceed supply

for next 5 years. Capacity utilization is currently at 76% (last year at 68%) and

with private investment flows coming in, can go to above 80% levels. Expect

private capex to happen only when the capacity utilization improves beyond

80%. Incremental Job creation has been slower but hasn’t seen deterioration

in existing jobs and that’s held up well.

HDFC Bank:

The process for selecting the new CEO (MD) would begin from approximately

18 months before the due date and the person is expected to be on board to

have a 12 a 12-month window to start the process of transition.

Since 70% of the Indian economy lives in semi – urban and rural areas, HDFC

Bank has started focusing in those areas 4-5 years back. Currently 20% of the

business comes from semi-urban/rural areas. The bank sees a huge

opportunity here and this should start adding to growth.

56% of the portfolio composition resonates to India GDP composition and

hence should continue to grow well for the bank. Have increased geographical

reach so do not have to push portfolio concentration and pressure on yields.

Digital has helped to analyze data and change process/revamp to align to the

customer preferences and faster TAT. New customer TAT has improved to 10

mins from 30 mins and for corporate would be half a day, for existing customer

on many products TAT on many loans less than 10 secs as it is also pre-

approved.

Retail credit has been much underpenetrated. Unsecured portion has got

higher mix due to digital improvement and hence the higher mix change and

has been factoring in pricing risk

Consumer Durables – HDFCB aspires to be larger than some of the biggest

players in next 12-18 months in consumer durable space with combined book

of HDFC Bank and HDB.

Agri business remains a difficult area, waivers have been disrupting the

payments.

HDFC Bank

May 15, 2018 3

Wholesale Banking

Project Finance & Working Capital Finance: HDFC Bank participates in term

finance which includes project finance as well. 30% of the wholesale book

(Rs2.96tn) constitutes of term loan lending. It dominates the working capital

funding space with presence in the entire supply chain.

Bank ranks second in debt capital market (on leagues tables) and

enjoys market share of 19%. With SEBI pushing the corporates to do

long term tenure raising of funds via bond markets, it sees bond market to

further grow and hence term lending will decrease.

Corporates are looking for better TAT across services offered, also looking

at better MIS and customized. Regarding PSUs, they are not losing market

share in the target market that HDFC Banks chooses to grow.

EEG segment having turnover of Rs2-20bn is also growing robust as

finding better opportunities with changing customer needs & improving

TAT.

Fees – Fees intensities has been coming off in DCM/ECM desk but with high

increase in volumes, fee income will be sizeable. Bank has gained market

share in transaction banking especially Fx fees with 12% of trade of the system

handled by Bank. Spreads compression can be mitigated from cross sell of

non-asset lending with structured solutions

Biz Banking: Bank is growing at faster rate using same underlying caveats

done in corporate book. It does lending based on the cash flows of the business

and to corporates with turnover of Rs0.5-1 bn. To mitigate the risk underlined

in the business, it keeps its sales and review process strong by regular training.

Government Business - It is the second largest bank in country in terms of

direct income tax collections. Bank has been benefitted from accreditation on

PFMS schemes and helping Govt. to process of funds on real time basis with

complete visibility of channel flow money to lower levels.

HDFC Bank

May 15, 2018 4

Tax collections for both state & central Govt

-

500

1,000

1,500

2,000

2,500

Direct tax collections (Rs bn) Indirect tax collections (Rs bn)

Source: Company, PL

HDFCB’s share has been continuously improving

16.0

%

20.0

%

21.0

%

21.2

%

22.2

%

23.2

%

22.1

%

22.0

%

24.6

%

25.7

%

26.1

%

15.0%

17.0%

19.0%

21.0%

23.0%

25.0%

27.0%

Source: Company, PL

Retail Banking & Liabilities

As economy improves, non-food discretionary expenses shall see an increase.

Currently, India spends 47% on food expenses.

Auto Loans – Growth has been led via multiple touchpoints such as dealers,

service centers and own branches. CV/CE – Bank is present in every segment

of CV and is mainly customer centric. It sees great scope in CV lending to

increase, enabled by GST and see good demand in trucks and tippers due to

high infra spending.

Personal Loans – Unsecured loan has become significant at 16.4% of the

loan mix with 50% of sourcing is to internal customers and high share through

digital channel. It is facing pricing pressure in certain pockets especially metros

and hence is growing in tier 3/4/5 cities and has been doing business in these

cities since 10 years now. Bank detects delinquencies in early stages only i.e.

30dpd.

Home Loans - GST issues pertaining to home loans expected to be solved by

this quarter i.e. 1Q19 and will start buying out from HDFC.

SHG Book - SHG book amounts to Rs50bn and approx. 1% of the network

caters to this segment and has been doing business with 8-9 mn families.

Bank is planning to launch loan against MF along with current product loan

against shares.

Customer acquisition: Branch continues to be mass led in customer

acquisition with the help of process by seeing untapped customer around the

branch radar. Bank has been acquiring 0.7mn NTB customers/month. They

also face high attrition rate with exit of RMs and hence coming up with virtual

RMs.

Retail Liabilities - Salaried continues to be a large part of customer segment

with 29% share in SA, however incrementally customers are more skewed

towards self-employed. Government Liabilities - Bank has penetrated in

all sectors of quality Govt. and also quasi Govt. book for liabilities, however,

prices quote on rates are highly sensitive. The acquisition of govt.

HDFC Bank

May 15, 2018 5

customers is possible because of the inherent advantage of large

distribution reach.

Private Banking – Private banking remains important strategy for cross sell,

help wealth management and improve sticky relationships. Bank handles AUM

of Rs1 trillion with average age tenure of AUM being 31 months.

Share of PL, Credit Cards and Biz Banking has been increasing in

retail mix

23% 22% 22% 22% 22% 22% 22% 21% 22% 21%

7% 7% 7% 7% 7% 7% 7% 6% 6% 6%

16% 17% 17% 18% 18% 18% 18% 19% 20% 20%

13% 11% 11% 12% 12% 13% 13% 14% 14% 15%

9% 9% 9% 8% 9% 9% 10% 10% 10% 10%13% 14% 14% 13% 14% 14% 13% 12% 11% 10%

14% 15% 14% 14% 14% 14% 13% 14% 13% 13%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18

Car CV 2W PL Biz Bank LAS CC Home loans Gold Loans Other

Source: Company, PL

Retail NPL has been up from biz banking

2.4

1%

1.7

8%

1.1

4%

0.8

4%

0.8

4%

0.9

6%

0.9

5%

1.0

8%

1.2

9%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

Source: Company, PL

Unsecured segment NPL remains low

0.4% 0.3% 0.3% 0.5% 0.6% 0.8% 0.8%0.8% 0.5% 0.5% 0.6% 0.6% 0.7% 0.8%

2.5%1.8% 1.4% 1.4% 1.5%

2.0%2.3%

0.5%

0.7% 1.3%2.2% 1.8%

1.4%1.3%0.4%

0.3%0.2%

0.1% 0.1%0.3%

0.4%2.6%

1.4% 0.9%

0.8% 0.8%0.9%

1.6%

2011 2012 2013 2014 2015 2016 2017

Auto PL/CC Retail Biz CV/CE House Other retail

Source: Company, PL

HDFC Bank

May 15, 2018 6

Retail Deposit Mix continues to be dominate

67%

68%

69%

71%

77%

79%

80%

79%

33%

32%

31%

29%

23%

21%

20%

21%

FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

Retail Deposit Mix Wholesale Deposit Mix

Source: Company, PL

NR deposits have fallen from peak levels

6.0% 5.4%7.0%

9.8%

15.7%15.4%15.5%

11.3%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

0

100

200

300

400

500

600

700

800

900


NR deposits (Rs bn) % of deposits

Source: Company, PL

Salaried customers continue to be the majority of bank’s

customers; however incrementally Bank is acquiring more self employed

43%

48% 47%50%

45%48%

53% 53%

44% 44%

27%

34% 34%

38%

34%32% 31% 31%

29% 29% 28% 29% 29%

20%

25%

30%

35%

40%

45%

50%

55%

FY

05

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

By Value By Accounts

Source: Company, PL

Digitial, Technology & Payments

Virtual Banking to be game changer in Digital front: Number of transactions

have increased from 45% (5 years ago) to 85% through internet and mobile.

They have partnered with 25-30 Fin Tech companies and work in collaboration

with them. They are coming up with new digital command centre which work

on real time basis and helps them to solve bank problems and customer

queries. They have solved 6.5mn queries in a month via chat bot. They are

coming up with virtual banking and creating virtual RMs and expect next set of

growth to come from this channel.

It is largest transaction processor in the country enjoying market share of 20-

25% in each of the segments i.e. clearing of cheques, RTGS, NEFT. To deal

with such large responsibility, it hits reset button every 3 years and is currently

migrating into brand new technology and by Sept, 2019 entire migration will be

done. It is the best in execution unlike any other bank in the country. Cost to

transaction has reduced by 300bps in last 3 years due to increase in volumes

HDFC Bank

May 15, 2018 7

Opex – Bank will continue to invest in brick and mortar and also on digital and

technology. Despite that C/I Ratio will likely to be trending downwards.

Bank has seen much higher capex mostly on

technology

7.7

5.9

15.1

13.7

5.8

8.1

12.1

12.0

6.0

5.8

7.9

10.0

9.7

8.9

10.0

12.6

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0


Capex Budgeted (Rs bn) Capex Actual (Rs bn)

Source: Company, PL

Capex to Other Opex Ratio is on improving trend

18%

15% 15% 15%

13%

10%9%

10%

5%

7%

9%

11%

13%

15%

17%

19%

21%


Source: Company, PL

New to Bank customers increasing on absolute

basis

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

0

5

10

15

20

25

30

35

40

45


Customer Base (mn) Growth in customers (RHS)

Source: Company, PL

Card customers have been broadly remained in

same range

0%

10%

20%

30%

40%

50%

60%

70%

80%


Credit Card Base/Total Customers

Debit Card Base/Total Customers

Source: Company, PL

HDFC Bank is the leader in entire banking

space…

27.8%

28.0%

28.2%

28.4%

28.6%

28.8%

29.0%

29.2%

Jan-1

7

Feb

-17

Mar-

17

Apr-

17

May-

17

Jun-1

7

Jul-17

Aug-1

7

Sep-1

7

Oct-17

Nov-

17

Dec-

17

Jan-1

8

Feb

-18

Transaction market share on Credit Cards (on volume)

Source: Company, PL

…in credit cards on basis of both value and

volumes

26.5%

27.0%

27.5%

28.0%

28.5%

29.0%

29.5%

30.0%

Jan-1

7

Feb

-17

Mar-

17

Apr-

17

May-

17

Jun-1

7

Jul-17

Aug-1

7

Sep-1

7

Oct-17

Nov-

17

Dec-

17

Jan-1

8

Feb

-18

Transaction market share on Credit Cards (on value)

Source: Company, PL

HDFC Bank

May 15, 2018 8

HDFC Bank ranks in Top 5 in terms of market

share…

6.0%6.1%6.2%6.3%6.4%6.5%6.6%6.7%6.8%6.9%

Jan-1

7

Feb

-17

Mar-

17

Apr-

17

May-

17

Jun-1

7

Jul-17

Aug-1

7

Sep-1

7

Oct-17

Nov-

17

Dec-

17

Jan-1

8

Feb

-18

Transaction market share on Debit Cards (on volume)

Source: Company, PL

…in debit cards on basis of both value and

customers

6.4%

6.6%

6.8%

7.0%

7.2%

7.4%

7.6%

7.8%

Jan-1

7

Feb

-17

Mar-

17

Apr-

17

May-

17

Jun-1

7

Jul-17

Aug-1

7

Sep-1

7

Oct-17

Nov-

17

Dec-

17

Jan-1

8

Feb

-18

Transaction market share on Debit Cards (on value)

Source: Company, PL

Subsidiaries

HDFC Securities - With 259 branches, it has made PAT of Rs3.5bn and

revenue of Rs7.8bn for FY18. Revenue mix constitutes 85% of brokerage and

15% distribution. Its distribution business overlaps with the bank. It has doubled

its active customers to 0.65mn in two years and incremental SIPs amounts to

0.3mn in 3 years. Its wealth management business is with the bank due to

which its customers are both mass and mass affluent.

HDB Financial Services – After starting this business 10 years ago, it has

scaled up pretty well. Its loan size is of Rs435b which is mainly into 3 segments

i.e. enterprise loans (50%), asset finance (35%) and consumer lending (15%).

It has its own underwriting, distribution process and sales team. It also does

back office work for HDFC Bank only and has nearly 50K employees for the

same and earns sizeable fees. Asset quality is stable at 1.6%/0.9% on 90dpd

GNPA/NNPA and credit cost at 2.5%. In Mar, 2017 it came up with right issue

of Rs11bn and requires no need to raise capital in medium term. It is

geographically present with north, south and west at 30% each and east at

10%. It caters to 1mn customers of which new to credit are 14%.

HDB Product Segment

Enterprise Loans – Avg. tenure is of 8 – 10 years with average ticket size of

Rs0.15mn. However, HDB does loans ranging maximum upto Rs120mn. Loan

repayment is done within 4-5 years.

Asset Financing – Asset financing is mainly trucks, tractors & CV/CE with

avg. tenure of 3-4 years and average ticket size of Rs0.8-1mn. It has linked

itself with top 4 manufacturers and its customer segment is small or second

hand fleet operators.

Consumer Durables – Average ticket size is under 0.1mn and avg. tenure is

around 6 to 36 months. Bank begun this segment 3-4 year back and has its

own arrangement with manufacturers and faces no pricing pressure.

HDFC Bank

May 15, 2018 9

We maintain our TP of Rs2,251 on 4.3x ABV Mar-20

PT calculation and upside

Fair price – EVA 2,253

Fair price - P/ABV 2,250

Average of the two 2,251

Target P/ABV 4.3

Target P/E 22.9

Current price, Rs 2047

Upside (%) 10.0%

Dividend yield (%) 0.7%

Total return (%) 10.7%

Source: Company, PL

Bank’s ROA should see gradual improvement towards 2.0% by

FY20

RoA decomposition FY13 FY14 FY15 FY16 FY17 FY18 FY19E FY20E

Interest income 9.50 9.22 8.96 9.27 8.64 8.32 8.55 8.72

Interest expenses 5.22 5.08 4.82 5.02 4.51 4.17 4.43 4.53

Net interest income 4.28 4.14 4.14 4.25 4.13 4.16 4.12 4.19

Treasury income 0.28 0.32 0.29 0.30 0.30 0.26 0.23 0.22

Other Inc. from operations 1.57 1.46 1.38 1.35 1.23 1.33 1.32 1.33

Total income 6.14 5.92 5.80 5.90 5.66 5.74 5.67 5.74

Employee expenses 1.07 0.94 0.88 0.88 0.81 0.71 0.64 0.61

Other operating expenses 1.97 1.76 1.71 1.74 1.65 1.65 1.70 1.77

Operating profit 3.10 3.22 3.22 3.29 3.21 3.39 3.33 3.36

Tax 0.82 0.96 0.94 0.98 0.95 0.96 0.95 0.97

Loan loss provisions 0.45 0.36 0.38 0.42 0.45 0.61 0.56 0.53

RoAA 1.82 1.90 1.89 1.89 1.81 1.82 1.82 1.86

RoAE 20.34 21.28 19.37 18.26 17.95 17.91 18.44 19.12

Source: Company, PL

HDFCB 1 year forward P/ABV trend – Valuations now at

demanding levels

2.7

2.9

3.1

3.3

3.5

3.7

3.9

4.1

4.3

4.5

4.7

Mar-

12

Jun-1

2

Sep-1

2

Dec-1

2

Mar-

13

Jun-1

3

Sep-1

3

Dec-1

3

Mar-

14

Jun-1

4

Sep-1

4

Dec-1

4

Mar-

15

Jun-1

5

Sep-1

5

Dec-1

5

Mar-

16

Jun-1

6

Sep-1

6

Dec-1

6

Mar-

17

Jun-1

7

Sep-1

7

Dec-1

7

Mar-

18

3 yr avg. avg. + 1 SD avg. - 1 SD P/ABV

Source: Company, PL

HDFC Bank

May 15, 2018 10

Income Statement (Rs. m)

Y/e Mar FY17 FY18 FY19E FY20E

Int. Earned from Adv. 5,20,553 6,26,618 7,59,980 9,20,328

Int. Earned from invt. 1,59,443 1,62,224 2,11,625 2,58,877

Others 13,064 13,572 21,594 15,469

Total Interest Income 6,93,060 8,02,414 9,93,198 11,94,674

Interest Expenses 3,61,667 4,01,465 5,14,356 6,20,976

Net Interest Income 3,31,392 4,00,949 4,78,842 5,73,698

Growth(%) 18.5 21.8 19.0 19.3

Non Interest Income 1,22,965 1,52,642 1,80,118 2,12,539

Net Total Income 4,54,357 5,53,591 6,58,960 7,86,237

Growth(%) 15.0 17.0 22.9 19.9

Employee Expenses 64,837 68,057 74,183 83,455

Other Expenses 1,23,866 1,59,479 1,93,792 2,36,426

Operating Expenses 1,97,033 2,26,904 2,71,482 3,25,903

Operating Profit 2,57,324 3,26,687 3,87,477 4,60,334

Growth(%) 20.5 27.0 18.6 18.8

NPA Provision 31,453 47,032 50,056 54,505

Total Provisions 35,933 59,275 65,360 72,195

PBT 2,21,391 2,67,412 3,22,118 3,88,139

Tax Provision 75,894 92,106 1,10,808 1,33,520

Effective tax rate (%) 34.3 34.4 34.4 34.4

PAT 1,45,496 1,75,306 2,11,309 2,54,619

Growth(%) 18.3 20.5 20.5 20.5

Balance Sheet (Rs. m)


Face value 2 2 2 2

No. of equity shares 2,563 2,595 2,595 2,595

Equity 5,125 5,190 5,190 5,190

Networth 8,94,624 10,62,950 12,29,045 14,33,650

Growth(%) 23.1 18.8 15.6 16.6

Adj. Networth to NNPAs 18,440 26,010 29,049 33,196

Deposits 64,36,397 78,87,706 93,46,932 1,10,29,380

Growth(%) 17.8 22.5 18.5 18.0

CASA Deposits 30,91,525 34,30,930 41,59,385 49,74,250

% of total deposits 48.0 43.5 44.5 45.1

Total Liabilities 86,38,402 1,07,19,343 1,25,98,431 1,47,92,523

Net Advances 55,45,682 65,83,331 80,31,664 98,38,788

Growth(%) 19.4 18.7 22.0 22.5

Investments 21,44,633 24,22,003 34,94,412 37,43,029

Total Assets 86,38,402 1,05,97,366 1,25,98,431 1,47,92,523

Growth (%) 16.6 22.7 18.9 17.4

Asset Quality


Gross NPAs (Rs m) 58,857 86,070 94,120 1,07,223

Net NPAs (Rs m) 18,440 26,010 29,049 33,196

Gr. NPAs to Gross Adv.(%) 1.1 1.3 1.2 1.1

Net NPAs to Net Adv. (%) 0.3 0.4 0.4 0.3

NPA Coverage % 68.7 69.8 69.1 69.0

Profitability (%)


NIM 4.1 4.2 4.1 4.2

RoAA 1.8 1.8 1.8 1.9

RoAE 17.9 17.9 18.4 19.1

Tier I 12.8 13.2 12.9 12.7

CRAR 14.6 14.8 14.3 13.9

Source: Company Data, PL Research

Quarterly Financials (Rs. m)

Y/e Mar Q1FY18 Q2FY18 Q3FY18 Q4FY18

Interest Income 1,86,687 1,96,703 2,05,813 2,13,211

Interest Expenses 92,980 99,182 1,02,669 1,06,634

Net Interest Income 93,707 97,521 1,03,143 1,06,577

YoY growth (%) 6.5 9.3 10.4 17.7

CEB 25,781 26,140 28,721 33,297

Treasury - - - -

Non Interest Income 35,166 36,059 38,691 42,726

Total Income 2,21,853 2,32,762 2,44,504 2,55,937

Employee Expenses 16,575 17,158 16,913 17,412

Other expenses 37,100 38,243 40,410 43,094

Operating Expenses 53,675 55,401 57,322 60,506

Operating Profit 75,199 78,179 84,512 88,797

YoY growth (%) 29.2 29.8 27.9 22.0

Core Operating Profits 71,885 74,620 81,918 88,577

NPA Provision 13,432 10,788 11,487 11,325

Others Provisions 15,588 14,762 13,514 15,411

Total Provisions 15,588 14,762 13,514 15,411

Profit Before Tax 59,611 63,417 70,998 73,386

Tax 20,673 21,907 24,573 24,953

PAT 38,938 41,510 46,425 48,433

YoY growth (%) 20.2 20.1 20.1 21.4

Deposits 67,13,761 68,93,459 69,90,264 78,87,706

YoY growth (%) 17.0 16.5 10.1 22.5

Advances 58,09,758 60,48,669 63,12,147 65,83,331

YoY growth (%) 23.4 22.3 27.5 18.7

Key Ratios


CMP (Rs) 2,022 2,022 2,022 2,022

EPS (Rs) 57.2 68.0 81.4 98.1

Book Value (Rs) 349 410 474 552

Adj. BV (70%)(Rs) 329 386 442 518

P/E (x) 35.4 29.7 24.8 20.6

P/BV (x) 5.8 4.9 4.3 3.7

P/ABV (x) 6.1 5.2 4.6 3.9

DPS (Rs) - 10.9 13.0 16.0

Dividend Payout Ratio (%) 0.0 19.5 19.2 19.6

Dividend Yield (%) - 0.5 0.6 0.8

Efficiency


Cost-Income Ratio (%) 43.4 41.0 41.2 41.5

C-D Ratio (%) 86.2 83.5 85.9 89.2

Business per Emp. (Rs m) 142 164 193 227

Profit per Emp. (Rs lacs) 17 20 23 28

Business per Branch (Rs m) 2,541 3,023 3,393 3,808

Profit per Branch (Rs m) 31 37 41 46

Du-Pont


NII 4.13 4.16 4.12 4.19

Total Income 5.66 5.74 5.67 5.74

Operating Expenses 2.46 2.35 2.34 2.38

PPoP 3.21 3.39 3.33 3.36

Total provisions 0.45 0.61 0.56 0.53

RoAA 1.81 1.82 1.82 1.86

RoAE 17.95 17.91 18.44 19.12

Source: Company Data, PL Research

HDFC Bank

May 15, 2018 11

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