HDFC Bank slips over 3 percent despite Q4 gain

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Private lender HDFC Bank dropped over 3 percent today even though it reported over 20 percent growth in the Q4 net gain on Saturday.

The banking stock fell 3.37 percent to hit a low of Rs 1894.85 before recovering a bit. Analysts largely remained positive on the stock and remained their target prices.

Edelweiss Securities said the best in class liability franchise, expansion of rural/ semi-urban branches and improvement in productivity owing to digital focus will ensure the bank delivers industry earnings growth. It has maintained its target price of Rs 2454.

HDFC on Saturday had posted 20.27 percent growth from last year at Rs 4799.28 crore- its highest ever quarterly profit for the January-March quarter driven by stable asset quality.

Net Interest Income increased 17.70 percent year-on-year to Rs 10657.71 crore during the quarter, from Rs 9055.10 crore a year earlier.

Asset quality remained stable as the percentage of gross Non Performing Assets (NPA) came in at 1.30 percent against 1.29 percent and 1.05 percent a year ago.

Nirmal Bang Institutional Equities noted that annual deposit traction growth at 22.5 percent came in strong. This was on top of solid fee income growth and traction in retail loan (despite significant home loan origination being ceded to parent).

Percentage of net NPAs as of March-end stood at 0.40 percent compared with 0.44 percent in the last quarter.

Provisions and contingencies increased 22.13 percent to Rs 1,541.10 crore during the quarter. The figure stood at Rs 1,261.80 in the same quarter last year.

Operating expenses have been under control, and significant digital initiatives have led to a consistent decline in the cost-to-income to 40 percent.

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