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ICICI Securities Report
HDFC Bank Ltd.'s Q2 FY23 earnings were exactly in line with our estimate. Profit after tax growth was reported at 20% YoY / 15% QoQ to Rs 106 billion.
Robust growth of 23.4% YoY / 6% QoQ in advances, and 10 bps net interest margin expansion, retraced net interest income growth to better than expected levels of 19% YoY / 8% QoQ (rebound from lows of 10% YoY in Q4 FY22).
This was offset by treasury hit of Rs 2.5 billion (over and above the Rs 13.1 billion in Q1 FY23).
Gross non-perfroming asset moderated QoQ to 1.23% (versus 1.28% QoQ) with slippages contained at 1.9%. Credit cost was managed at 0.87% (versus 0.91% / 0.97% in Q1 FY23 / Q4 FY22).
Continued investment led to an elevated opex-to-assets ratio of more than 2% as opex grew 21% YoY / 7% QoQ. Core operating profit grew 16.6% YoY / 5.8% QoQ.
HDB Financial Services' earnings too reflected pick-up in growth traction and asset quality improvement. With respect to merger with Housing Development Finance Corporation, given the encouraging pace of approvals, the amalgamation seems a quarter or a few months ahead of the guided timeframe.
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