HDFC Bank’s asset quality deteriorated due to second Covid-19 wave as GNPA stood at 1.47% versus 1.36% YoY (1.32% QoQ) while NNPA at 0.5% versus 0.3% YoY (0.4% QoQ).

Annualized slippage ratio increased to 2.54% vs 1.2% YoY (1.66% QoQ). Restructured assets stood at 80bps of advances as of Q1FY22; led by retail portfolio. However, 2/3rd of this constitutes unsecured assets. Collections were impacted in April and May however picked up in June. 

Advances growth remains stable at 14.4% YoY vs 14.0% YoY in Q4FY21 led by wholesale loans (10.2% growth) and retail loan growth of 9.3%.

Deposits growth slowdown to 13% YoY (16% YoY in Q4FY21) while, CASA growth remain robust at 28%.

NII grew slowly by 9% YoY due to decline in NIMs. PPoP grew by 18% YoY as cost to income ratio remains stable at 35%; fee income grew by 74% YoY and sequentially down by 23%. Provision grew by 24% YoY resulted into high credit cost at 1.5% vs 1.1% YoY. Thus, lower PAT growth at 16% YoY, the private sector lender said.

Commenting on the result review, IDBI Capital said, "As overall economy expected to improve in H2FY22, we believe that HDFCB would see the best revival in growth within the sector. We have largely retained our estimates and have BUY rating with the new target price of Rs.1,790 (earlier 1,740) based on P/Bv of 3.6x FY23."

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