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Motilal Oswal Report
HDFC Bank Ltd. reported an in-line quarter, with profit after tax up 20% YoY, aided by a pick-up in net interest income growth due to 10 basis points QoQ expansion in margin.
Pre provision operating profit growth remained modest at 10% YoY, adversely impacted by a treasury loss of Rs 2.5 billion. However, core PPoP growth was healthy at ~17% YoY in Q2 FY23.
Business growth remained healthy led by strong traction in commercial and rural banking as well as corporate book while retail too grew strongly.
HDFC Bank’s asset quality ratios remained robust and witnessed a sequential decline led by moderation in slippages and healthy recoveries and upgrades.
Restructured book too declined to ~53 bps of loans in Q2 FY23 (from 76 bps in Q1 FY23). Healthy provision coverage ratio of ~73% and a contingent provision buffer (at 65 bps of loans) provided comfort on asset quality.
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