HDFC Q2 Results Review - Repricing Benefit To Reflect With A Lag, Credit Cost Under Control: ICICI Securities

ICICI Securities Report

With repricing benefit more than offsetting the cost pressures in Q2 FY23, Housing Development Finance Corporation Ltd.'s spreads improved a tad by 3 basis points QoQ to 2.28%. Net interest income growth thereby retraced to 13% YoY with 4% QoQ rise.

With overall improvement in asset quality (stages-II,III declined across individual and corporate books), credit cost was contained at less than 30 bps (better than we expected).

Growth in the individual portfolio improved to 20% (versus 19% / 17% / 16% / 16% / 13.6% in Q1 FY23 /Q4/Q3/Q2/Q1 FY22) and overall assets under management growth was sustained 16% YoY.

Drawing further support from net gain on fair of investments at Rs 1.42 billion (Rs 1.51 billion in H1 FY23) and dividend income of Rs 13.6 billion (Rs 20.5 billion in H1 FY23), HDFC registered profit after tax growth of 17.8% YoY and 21.4% QoQ to Rs 44.5 billion, exceeding our expectations.

We expect NII growth to further gain traction in the coming quarters with repricing benefit likely to be reaped in its entirety.

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