HDFC declares Rs. 6.5/share dividend on Friday

On 18 June 2021, HDFC Bank declared a dividend of Rs. 6.5 per share (650% on the face value of Re. 1) for the year ended 31 March 2021. However, the proposal is up for shareholders’ approval at the Annual General Meeting scheduled on 17 July 2021.

If shareholders approve this recommendation, the expected date for this dividend pay-out in electronic and physical format will begin 2 August 2021 onwards.

New appointments and tenure extensions

HDFC Bank’s board has approved Umesh Chandra Sarangi’s reappointment as an independent director. Previously, the board approved his appointment tenure from 1 March 2021 to 5 February 2022. After implementing this new revision norm, his term has been extended up to 29 February 2024.

According to RBI’s guidelines, financial institutions with an asset size worth Rs. 15000 crore and above (at the end of the previous fiscal year) must appoint at least 2 joint statutory auditors.

In compliance, the board of HDFC Bank decided to appoint the chartered accountant firm, M.M. Nissim & Co LLP, to serve as its joint statutory auditors until 2023-2024. This appointment is subject to RBI’s approval. MSKA & Associates is currently the statutory auditor of this private lender.

Strong financials figures

HDFC Bank’s recent earnings report shows it registered a surge in net profits by 18.1% to Rs.  8186.51 crores for the quarter ending 31 March 2021. During the same period last year, it had reported a profit of Rs. 6927.69 crores.

This quarter, the bank’s net interest income surged by 12.6% to Rs. 17120 crores per its quarterly earnings report. For the quarter ended 31 March 2020, the net interest income was recorded at Rs. 15204 crores.

Similarly, this private lender’s gross non-performing assets (NPAs) increased by 1.32% on a Y-o-Y basis. Their net non-performing assets were recorded at 0.40% compared to last year’s 0.36%. For the same period, deposits of HDFC bank are up by a sharp 16.3% on a Y-o-Y basis, and its advances also increased by 14% Y-o-Y.

HDFC Bank’s net interest margin for Q4 of FY21 was recorded at 4.2% against 4.3% for the quarter ending 31 March 2020.

Bottom line

Strong financials and a robust dividend yield on this banking stock are likely to stir investors’ interest. They can expect to generate substantial returns from their investments in similar stocks in a recovering market and economic environment. However, investors must analyse the financials of different banks and commercial lenders individually to determine the viability of their stocks.