HDFC Bank Q3 Results Review - In A Capex Investment Mode; Opex Could Remain Elevated: Systematix
HDFC Bank plans to invest in brick & mortar structure (branch expansion) in next 2.5 yrs to strengthen retail liability franchise.
BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Systematix Research Report
In Q3 FY23, HDFC Bank Ltd.'s performance was quite steady, should we exclude one-time gain (in terms of interest income on IT refunds at Rs 3.0 billion, 5-6 basis points of assets), utilisation of contingent provision (of ~Rs 2.0 billion, ~4 bps of assets) and higher employee expenses (8 bps above the normalized run-rate) and higher than expected operating overheads (7 bps more than the usual run-rate).
The improvement in return on average asset (by ~20 bps QoQ to 224 bps) has come from higher noninterest income and lower credit cost, the elevated RoAA could be difficult to sustain, in our opinion.
As per the HDFC Bank’s annual meet (in June 2022), it’s distinctly clear that it plans to add 1,500 – 2, 000 branches each year for the next next years; in nine months-FY23, HDFC Bank has added 841 branches and there’re another ~600 branches in the pipeline to be added.
Therefore, the operating cost metrics would not change much from the Q3 FY23 level. Notably, HDFC Bank’s management plans to double its branch counts in three years time frame.
Click on the attachment to read the full report:
More Research Reports On HDFC Bank's Q3 FY23 Results Review
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.