HDFC Bank shares decline 3% post Q1 business update

HDFC Bank declined around 3 percent in morning trade on July 5, after the company announced its first quarter business update for FY24.

At 10.57 am, the stock was trading at Rs 1,671.80 on the National Stock Exchange, down 3.26 percent from the previous close.

HDFC Bank informed the exchanges on July 5 that its advances aggregated to approximately Rs 16.15 lakh crore for the quarter ended June 30, up nearly 15.8 percent year on year (YoY) from Rs 13.95 lakh crore a year ago. The bank’s advances grew around 0.9 percent on quarter over quarter (QoQ) basis against Rs 16 lakh crore in Q4FY23.

The banks’s deposits jumped 19.2 percent YoY for the said quarter to Rs 19.13 lakh crore, as compared to Rs 16.04 lakh crore in Q1FY23. They were up 1.6 percent QoQ from Rs 18.83 lakh crore in the quarter ended March 31, 2023.

During the quarter under review, the retail deposits were increased by Rs 38,000 crore, growing by 21.5 percent YoY and 2.5 percent QoQ. The wholesale deposits improved by approximately 9 percent YoY and declined by around 2.5 percent QoQ.

In Q1FY24, the bank purchased loans aggregated to Rs 11,632 crore through the direct assignment route under the home loan arrangement with HDFC Ltd.
As on June 30, 2023, HDFC Bank’s CASA deposits aggregated to Rs 8.13 lakh crore, an improvement of 10.7 percent over Rs 7.34 lakh crore as on June 30, 2022. CASA deposits were down 2.7 percent over Rs 8.36 lakh crore at March end.  The retail CASA grew by 11 percent in Q1FY24 against Q1FY23, but fell by 2 percent QoQ. The Bank’s CASA ratio stood at around 42.5 percent in the said quarter, compared to 45.8 percent in Q1FY23 and 44.4 percent in Q4FY23.

Commenting on the update, analysts at brokerage firm Prabhudas Lilladher stated, “Loan growth numbers are lower, probably due to focus on the merger. While loan offtake seems to be lower for the system, retail growth was strong at 4 percent QoQ, which is a positive, and the share of retail is expected to improve this quarter.” They further added that deposit accretion has been in-line with credit offtake, although the 2.7 percent QoQ decline in CASA seemed seasonal in nature. The brokerage firm has given a “Buy” rating on the stock at a target price of Rs 1925.

Merged Entity Q1 Update

Some key takeaways about HDFC Bank and HDFC’s merged balance sheet:

-Gross advances were up 13.1 YoY and 0.7 percent QoQ basis, reaching  Rs 22.45 lakh crore.

– Deposits aggregated to approximately Rs 20.63 lakh crore in Q1FY24, up 16.2 percent YoY and 1.2 percent QoQ.

– The merged entity’s average liquidity coverage ratio for the Q1 stood at around 120 percent on a proforma basis.

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