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Dolat Capital Report
HDFC Bank Ltd. posted strong net interest income growth (19%/8% YoY/QoQ) with 10 basis points sequential expansion in reported net interest margin.
Despite continued treasury losses, bank managed return on asset of 2% in Q2 FY23. Calculated NIM was at its highest in the last six quarters.
Asset quality fared well with gross non-performing asset lower QoQ and steady provision coverage ratio. ~25% of opening restructured book slipped to non-performing asset in H1 FY23, though overall slippages/credit costs were contained at 1.5% and 90 bps respectively.
We believe the merger aids long-term growth prospects and that the bank can deliver ~1.9-2% RoA on a sustained basis. Further, the bank received National Company Law Tribunal nod for holding shareholder meeting regarding approval of the proposed merger.
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