Dalal Street Investments

HDFC Bank – Q3 Result Analysis

January 14, 2009

HDFC Bank delivered stable operational performance in the current quarter, in line with its historical trend. PAT (Rs6.2 bn) was up 30% yoy and 11% ahead of our estimates. The company was able to increase its net interest margin (NIM) to around 4.3% in 3QFY09 despite a decrease in CASA ratio due to better pricing of its loan products.

HDFC Bank’s outstanding loans declined by 3% on a sequential basis and while its investments increased sharply by 43% during the same period. We believe that slower loan growth is prudent in the current stage of the economic cycle.

Gross NPLs increased to Rs19.1 bn (up 14% sequentially)-management indicates that it is largely on account of erstwhile CBoP.

HDFC Bank is expected to report an EPS of Rs 53.5 for FY09 and Rs 67 for FY10.


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