1QFY2019 Result Update | Banking
July 24, 2018
HDFC Bank
Accumulate
CMP
`2,158
Performance Highlights
Target Price
`2,350
Particulars (` cr)
1QFY19
4QFY18
% chg (qoq)
1QFY18
% chg (yoy)
Investment Period
12 Months
NII
10,814
10,656
1.48
9,371
15.40
Pre-prov. profit
8,648
8,835
-2.12
7,519
15.01
Stock Info
PAT
4,601
4,799
-4.12
3,893
18.19
Source: Company, Angel Research
Sector
Banking
HDFC Bank delivered steady performance for Q1FY19, with PAT growth of 18.2%
Market Cap (` cr)
5,70,787
yoy. On the operating front, the bank reported 15.4% yoy growth in NII, however,
Beta
1.1
52 Week High / Low
2,219/1,685
the numbers disappointed on NIM front. NIM declined by 20bps on a sequential
Avg. Daily Volume
14,97,970
basis to 4.2%. The bank managed to reduce its expenses and brought down the
Face Value (`)
2
cost/income ratio from 41.7% in 1QFY18 to 40.9% in 1QFY19.
BSE Sensex
36,859
Healthy operating profit growth; Asset quality stable
Nifty
11,137
Reuters Code
HDBK.NS
During 1QFY19, the bank’s advances grew by 22% yoy, of which retail loan book
Bloomberg Code
HDFCB:IN
increased 25% yoy to constitute 54% of the total advances. The wholesale loans
inched up by 18% yoy. The net interest income during this period grew by 15.4%
yoy, which is not congruent to the advances growth. NIM compression was led by
Shareholding Pattern (%)
higher share of home loan (lower yield), lower yield on investment, low CASA
Promoters
20.9
growth and interest reversal in agri portfolio. Moreover, a slower rise in opex
MF / Banks / Indian Fls
17.1
aided lower cost/income by 75bps yoy to 40.9% in Q1FY19.
FII / NRIs / OCBs
52.0
Total deposits surged by 20% yoy and 2.2% qoq in 1QFY19. CASA deposits
Indian Public / Others
10.1
accounted for 41.7% of the total deposits.
On asset quality front, the bank continued to maintain strong asset quality with a
GNPA/NPA ratio of 1.33%/0.4% of loans. Total slippages for the quarter were
Abs. (%)
3m 1yr 3yr
`3,580cr vs. `2,790cr qoq.
Sensex
7.0
24.0
29.0
Outlook & Valuation: Credit growth beat the industry growth rate, driven by strong
HDFC Bank
12.0
14.0
92.0
retail business. The Strong liability franchise and healthy capitalisation provides
strong earning visibility. At the current market price, the bank is trading at 3.6x
FY20E ABV. We recommend a Buy rating on the stock, with a target price of
3-year price chart
`2,350/-.
2500
2000
Key financials (Standalone)
1500
1000
Y/E March (` cr)
FY16
FY17
FY18
FY19E
FY20E
500
NII
27,592
33,139
40,092
46,775
54,803
0
% chg
23.6
20.1
21.0
16.7
17.2
Net profit
12,296
14,549
17,486
21,080
25,741
% chg
21.2
18.3
20.2
20.6
22.1
Source: Company, Angel Research
NIM (%)
4.5
4.5
4.4
4.3
4.2
EPS ( Rs)
48.6
56.8
67.5
77.5
94.6
P/E (x)
44.3
38.0
31.9
27.8
22.8
P/ABV (x)
7.6
6.6
5.4
4.1
3.6
Jaikishan Parmar
RoA (%)
1.9
1.9
1.8
1.8
1.8
Research Analyst
RoE (%)
18.3
18.3
18.2
16.6
16.3
022 - 39357600 Ext: 6810
Note: CMP as of 23/7/18
[email protected]
Please refer to important disclosures at the end of this report
1
HDFC Bank | Q1FY2019 Result Update
Exhibit 1: quarterly results summary
Particulars (` cr)
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Q1FY19
% QoQ
% YoY
Interest earned
17,070
17,606
18,115
18,669
19,670
20,581
21,319
22,549
5.8%
20.8%
- on Advances / Bills
12,901
13,176
13,508
14,486
15,356
16,157
16,663
17,391
4.4%
20.1%
- on investments
3,818
4,049
4,268
3,893
4,007
4,100
4,222
4,589
8.7%
17.9%
- on balance with RBI & others
140
187
165
108
107
112
196
332
69.6%
207.2%
- on others
211
194
174
182
202
212
238
237
-0.6%
30.3%
Interest Expended
9,076
9,297
9,059
9,298
9,918
10,267
10,663
11,735
10.1%
26.2%
Net Interest Income
7,994
8,309
9,055
9,371
9,752
10,314
10,656
10,814
1.5%
15.4%
Other income
2,902
3,143
3,446
3,516
3,606
3,868
4,229
3,818
-9.7%
8.6%
- Fee & commission income
2,104
2,207
2,523
2,578
2,614
2,872
3,330
3,171
-4.8%
23.0%
- Treasury income
284
399
180
331
356
259
-22
-283
1187.3%
-185.6%
- Forex & derivative income
295
297
356
297
384
426
416
500
20.1%
68.2%
Others
219
240
386
310
252
311
505
431
-14.7%
38.9%
C/I
44.7%
42.3%
41.8%
41.7%
41.5%
40.4%
40.6%
40.9%
Operating income
10,896
11,452
12,501
12,887
13,358
14,182
14,885
14,632
-1.7%
13.5%
Operating expenses
4,870
4,843
5,222
5,368
5,540
5,732
6,050
5,984
-1.1%
11.5%
- Employee expenses
1,657
1,689
1,553
1,658
1,716
1,691
1,741
1,811
4.0%
9.2%
- Other Opex
3,213
3,154
3,669
3,710
3,824
4,041
4,309
4,173
-3.1%
12.5%
Pre-provision Profit
6,026
6,610
7,279
7,519
7,818
8,450
8,835
8,648
-2.1%
15.0%
Provisions & Contingencies
749
716
1,262
1,559
1,476
1,351
1,541
1,629
5.7%
4.5%
PBT
5,277
5,894
6,017
5,961
6,342
7,099
7,294
7,018
-3.8%
17.7%
Provision for Tax
1,820
2,028
2,028
2,067
2,191
2,457
2,495
2,417
-3.1%
16.9%
PAT
3,456
3,866
3,990
3,893
4,151
4,641
4,799
4,601
-4.1%
18.2%
Effective Tax Rate (%)
34
34
34
35
35
35
34
34
0.7%
-0.7%
Advance
4,94,418
4,95,043
5,54,568
5,80,976
6,04,867
6,31,215
6,58,333
7,08,649
7.6%
22.0%
YoY%
23%
22%
28%
19%
22%
Yield Asst
7,18,949
7,35,201
7,80,087
8,17,851
8,55,034
8,69,560
9,18,778
9,96,232
Borrowing
77,039
72,121
74,029
86,012
1,01,531
1,03,867
1,23,105
1,21,024
Deposit
5,91,731
6,34,705
6,43,640
6,71,376
6,89,346
6,99,026
7,88,770
8,05,785
2.2%
20.0%
CA
79,154
1,01,239
1,15,574
1,02,030
97,825
1,01,286
1,19,283
1,09,297
-8.4%
7.1%
SA
1,59,950
1,86,634
1,93,579
1,93,105
1,97,655
2,05,833
2,23,810
2,26,656
1.3%
17.4%
CASA
40%
45%
48%
44%
43%
44%
43%
41.7%
Advance Yield
10.7%
10.7%
10.3%
10.2%
10.4%
10.5%
10.3%
10.2%
NIM
4.37%
4.34%
4.52%
4.48%
4.47%
4.60%
4.42%
4.20%
COF
5.54%
5.41%
5.09%
5.04%
5.12%
5.15%
4.97%
5.11%
GNPA
5,069
5,232
5,886
7,243
7,703
8,235
8,607
9,539
10.8%
31.7%
GNPA
1.03%
1.06%
1.06%
1.25%
1.27%
1.30%
1.31%
1.35%
NPA
1,469
1,564
1,844
2,528
2,597
2,774
2,601
2,907
11.8%
15.0%
GNPA
0.30%
0.32%
0.33%
0.44%
0.43%
0.44%
0.40%
0.41%
Source: Company
July 24, 2018
2
HDFC Bank | Q1FY2019 Result Update
Income Statement
Y/E March (` cr)
FY16
FY17
FY18
FY19E
FY20E
Net Interest Income
27,592
33,139
40,092
46,775
54,803
- YoY Growth (%)
23.6
20.1
21.0
16.7
17.2
Other Income
10,752
12,296
15,221
17,180
21,199
- YoY Growth (%)
19.5
14.4
23.8
12.9
23.4
Operating Income
38,343
45,435
55,313
63,956
76,003
- YoY Growth (%)
22.4
18.5
21.7
15.6
18.8
Operating Expenses
16,980
19,703
22,690
26,090
30,768
- YoY Growth (%)
21.4
16.0
15.2
15.0
17.9
Pre - Provision Profit
21,364
25,732
32,623
37,865
45,235
- YoY Growth (%)
23.2
20.4
26.8
16.1
19.5
Prov. & Cont.
2,726
3,593
5,927
6,252
6,816
- YoY Growth (%)
31.3
31.8
65.0
5.5
9.0
Profit Before Tax
18,638
22,139
26,696
31,614
38,419
- YoY Growth (%)
22.1
18.8
20.6
18.4
21.5
Prov. for Taxation
6,342
7,589
9,210
10,533
12,678
- as a % of PBT
34.0
34.3
34.5
33.3
33.0
PAT
12,296
14,549
17,486
21,080
25,741
- YoY Growth (%)
21.2
18.3
20.2
20.6
22.1
Source: Company
Balance Sheet
Y/E March (` cr)
FY16
FY17
FY18
FY19E
FY20E
Share Capital
506
513
518
544
544
Reserves & Surplus
72,172
85,502
1,05,776
1,46,560
1,67,687
Net Worth
72,678
86,014
1,06,294
1,47,104
1,68,231
Deposits
5,46,424
6,43,640
7,88,770
9,30,749
11,16,898
- Growth (%)
21.2
17.8
22.5
18.0
20.0
Borrowings
53,018
74,029
1,23,105
1,23,790
1,56,366
Other Liab & Prov.
36,725
56,709
45,764
74,460
89,352
Total Liabilities
7,08,846
8,60,392
10,63,933
12,76,102
15,30,847
Cash balances
30,058
37,897
1,04,670
51,191
61,429
Bank balances
8,861
11,055
18,244
14,892
17,870
Investments
1,63,886
2,14,463
2,42,200
3,07,147
3,68,576
Advances
4,64,594
5,54,568
6,58,333
8,03,166
9,79,863
- Growth (%)
27.1
19.4
18.7
22.0
22.0
Fixed Assets
3,343
3,627
3,607
5,771
6,925
Other Assets
38,104
38,782
36,879
93,935
96,183
Total Assets
7,08,846
8,60,392
10,63,933
12,76,102
15,30,847
- Growth (%)
20.0
21.4
23.7
19.9
20.0
Source: Company
July 24, 2018
3
HDFC Bank | Q1FY2019 Result Update
Key Ratio
Y/E March
FY16
FY17
FY18
FY19E
FY20E
Profitability Ratios (%)
NIMs
4.5
4.5
4.4
4.3
4.2
Cost to Income Ratio
44.3
43.4
41.0
40.8
40.5
RoA
1.9
1.9
1.8
1.8
1.8
RoE
18.3
18.3
18.2
16.6
16.3
B/S ratios (%)
CASA Ratio
43.2
48.0
43.5
45.0
45.0
Credit/Deposit Ratio
85.0
86.2
83.5
86.3
87.7
CAR
15.5
14.7
17.3
16.7
16.1
- Tier I
13.2
12.9
15.8
15.4
15.1
Asset Quality (%)
Gross NPAs
0.9
1.1
1.3
1.3
1.3
Net NPAs
0.3
0.3
0.4
0.4
0.4
Slippages
1.6
1.5
1.5
1.0
1.0
Loan Loss Prov./Avg. Assets
0.6
0.6
0.9
0.8
0.7
Provision Coverage
70
69
69
69
69
Per Share Data (`)
EPS
48.6
56.8
67.5
77.5
94.6
BVPS
287
336
410
541
619
ABVPS
282
328
400
529
607
DPS
9.5
11.5
13.5
13.5
14.5
Valuation Ratios
PER (x)
44.3
38.0
31.9
27.8
22.8
P/BVPS (x)
7.5
6.4
5.3
4.0
3.5
P/ABVPS (x)
7.6
6.6
5.4
4.1
3.6
Dividend Yield
0.4
0.5
0.6
0.6
0.7
DuPont Analysis (%)
Interest Income
9.3
8.8
8.3
8.3
8.2
Interest Expenses
5.0
4.6
4.2
4.3
4.3
NII
4.2
4.2
4.2
4.0
3.9
Non Interest Income
1.7
1.6
1.6
1.5
1.5
Total Revenues
5.9
5.8
5.7
5.5
5.4
Operating Cost
2.6
2.5
2.4
2.2
2.2
PPP
3.3
3.3
3.4
3.2
3.2
Total Provisions
0.4
0.5
0.6
0.5
0.5
PreTax Profit
2.9
2.8
2.8
2.7
2.7
Tax
1.0
1.0
1.0
0.9
0.9
ROA
1.9
1.9
1.8
1.8
1.8
Leverage
9.6
9.9
10.0
9.2
8.9
RoE (%)
18.3
18.3
18.2
16.6
16.3
Note - Valuation done on closing price of 23/07/2018
July 24, 2018
4
HDFC Bank | Q1FY2019 Result Update
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
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Disclosure of Interest Statement
HDFC Bank
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives
No
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
No
July 24, 2018
5