Meanwhile, last week, HDFC Bank
reported a healthy 16 per cent year-on-year (YoY) or 4 per cent quarter-on-quarter (QoQ) credit growth at Rs 10.8 trillion for the October-December quarter (Q3FY21), mainly driven by retail (festive pick-up) and amid continued momentum in working capital corporate loans.
Deposit growth moderated further to 19 per cent YoY (3 per cent QoQ) to Rs 12.7 trillion, while the CASA ratio improved 140 basis points (bps) QoQ to 43 per cent - a phenomenon seen across banks.
Though management has not provided any update on recent asset quality behaviour, we believe that HDFC Bank should reflect the general positive asset quality experience indicated by other players in the industry, analysts at Emkay Global Financial Services said in a stock update.
“We believe that overall business momentum for HDFC Bank remains healthy compared to the industry. A structurally better cost-income ratio and high provisioning buffer (0.7 per cent of loans in Q2) should help absorb the ensuing moderate asset-quality risk, leading to continued healthy return ratios,” the brokerage firm said.
However, in the wake of a spate of recent management churn and adverse events, including misconduct in auto business and new card acquisition suspension, we believe that the new top management has a task cut out to overcome these hurdles and sustain its historic management premium, it added.
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