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HDFC Bank Posts Higher Loan Growth Across Segments In Q4: Analysts' Take

Here's what analysts have to say about HDFC Bank's Q4 business update...

HDFC Bank Ltd. brochures are arranged for a photograph at the company’s bank branch in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)
HDFC Bank Ltd. brochures are arranged for a photograph at the company’s bank branch in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

HDFC Bank Ltd. saw loan growth across retail, wholesale, and commercial portfolios in the quarter ended March.

The private lender's retail loans were up 15% year-on-year and 5% over the preceding three months, according to its business update released on the bourses.

  • Wholesale loans up 17.5% year-on-year and 11.5% sequentially.

  • Commercial and rural banking loans up 30.5% year-on-year and 10% quarter-on-quarter.

HDFC Bank saw its advances rise 20.9% over the year earlier to Rs 13.7 lakh crore. Its deposits grew 16.8% year-on-year to Rs 15.6 lakh crore.

CASA deposits rose 22% over the year earlier. CASA ratio stood at 48% as of March 2022 compared with 46.1% as of March 2021 and 47.1% as of December 2021.

HDFC Bank added 563 branches in Q4, leading to a network of 6,342 branches against 5,779 as of December 2021.

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Here's what analysts have to say about HDFC Bank's Q4 business update...

Morgan Stanley

  • Maintains 'overweight' with target price Rs 1,800 apiece—an implied return of 23.98%.

  • Initial update points to very strong growth in loans and retail deposits and continued market share gains.

  • Loan growth was strong in retail and commercial, with a big surprise in corporate banking.

  • Deposit growth accelerated to 16.8% YoY, higher than the system.

  • Wholesale loan growth was strong at 11.5% QoQ. while commercial and rural loan growth rose to 30.5% YoY.

Jefferies

  • Reiterates 'buy' with target price at Rs 2,160—an implied return of 43.43%.

  • Q4FY22 pre-quarter release shows improving momentum across parameters.

  • Loan growth rose to 8.6% QoQ vs 5% in Q3FY22.

  • Improvement was visible across categories, retail, commercial and corporate.

  • CASA deposits rose 10% QoQ and CASA ratio improved to 48%.

  • Continued improvement in loan growth should reflect in top line growth soon.

  • Sustained growth momentum is likely to aid re-rating.

Emkay Global

  • Reiterates 'buy' with a target price of Rs 2,050—an implied return of 36.1%.

  • Bank reported higher-than-expected credit growth of 21% YoY, led by strong traction in low-margin corporate and commercial/rural banking portfolios.

  • Lender retained housing loans to Rs 8,100 crore on assignment from HDFC Ltd.

  • Deposit growth remains healthy at 17% YoY with retail deposit growth at 19% YoY

  • Expects NPAs to trend down for most banks, including HDFC Bank, due to better collection trends seen in retail portfolios.

  • The bank may decide to partially reverse some Covid contingent provisions in a bid to boost profitability.

  • Recent lifting of a prolonged embargo on digital initiatives and strong business growth in Q4 should have a positive rub-off on the stock.

  • The bank's unsecured retail loan growth should reaccelerate as the risk-aversion is receding and embargo on cards are being lifted.