BQ Blue’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 BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Systematix Research Report
In Q2 FY22, HDFC Bank Ltd.’s core earnings (net profitability before tax adjusted for non-recurring non-interest income and credit cost, including contingent provision) improved to 219 basis points of average assets (from 181 bps in Q1 FY22).
Reduction in funding cost (contained margin erosion), elevated one-off gains in non-interest income, traction in core fee income and lower credit cost (including contingent provision) led to a higher return ratio at 16.4% (from 14.9% in Q1 FY22).
We believe HDFC Bank’s contingent provision of 77 bps can take care of any shocks from the standard restructured loan book (at 167 bps of loans).
Therefore, incremental credit costs would largely depend on incremental net delinquencies.
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