HDFC Bank Q1 Review – Earnings, Provisions In-Line; Unfavourable Asset Mix Dents Margin: Motilal Oswal

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HDFC Bank Ltd. reported an in line performance, though margin fell by 10 basis point QoQ on higher interest reversals, unfavorable asset mix, and lower revolving balances on credit cards.

The banks further shored up its contingent provisions by Rs 6 billion to ~Rs 66 billion (~0.6% of loans), though this dragged net earnings growth to 16% YoY – the lowest in the past many years.

HDFC Bank’s advances growth stood at 14% YoY, led by healthy trends in the commercial and rural banking portfolio, while retail growth was muted due to a sharp (7% QoQ) decline in the credit cards portfolio, which was affected by Reserve Bank of India’s restriction on sourcing of new credit cards and lower revolving balances.

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Motilal Oswal HDFC Bank Q1FY22 Result Update.pdf


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