That’s good details. How does this extra provision compare to current absolute NPAs and also with those done by other banks like ICICI and emerging ones like IDFC? Thanks
I am not sure about the status at other Banks.
However on an absolute basis, the asset Quality looks - Super Good !!!
Sometimes, I keep wondering if HDFC bank operates on a different planet.
I mean, their asset Quality is just too good.
Plus the sharp growth in CASA deposits. They keep surprising everyone.
Disc : holding. Views may be biased.
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Asset quality continues to remain pristine, no doubt.
But the last few years Loan Book growth has slowed down, let’s see if this is a result of the slowing economy, them tightening credit standards or just the large base effect.
Either way has strong implications for growth portfolios going forward. HDFC Bank is every investor’s delight because they grow rapidly while maintaining credit standards.
Last 5yrs or so, this slowing growth has been masked by increasing cost efficiencies, that means the bottom line has still shown good problem. The only problem is that there is a limit to how much those costs can go down. And btw, ROE has been falling continuously, but not ROA so much, which means they’re reducing leverage levels, not sure why when they keep talking about how India is a credit-starved country and they have room to grow, and asset quality/credit underwriting is pretty good. Don’t understand the overconservatism.
Not sure if the market will continue to put a 4x BV mutliple if growth keeps slowing.
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Not sure if its helpful, they used to offer 20L Loan on two wheelers and four wheelers on netbanking offers page. All these were removed once COVID started. So, they did a good risk management. I think all these will get started once its cleared.
The results although look good, I have following concerns
The profit from Retail Segment has fallen more than 50% YoY and it is corporate lending which is accelerated. Still uncertainty hanging over covid related provisions ( except 10% as per RBI guidelines). Although all banks are recognising the income of all loans under moratorium, even if no interest is received, but at the same time they are not making sufficient provisions. So, asset quality is all banks is supposed to become better optically. However, HDFC banks has clarified that actual Gross NPA ( had there been no moratorium related issue) would be 1.38% instead of 0.81%. So, IMO bank as prudent measure could make more provisions. The income from treasury has also increased, overall quality of earnings is not that encouraging. Other parameters like Capital Adequacy Ratio etc are good.
Disclosure: Not invested
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This talks about an organisations, internal controls, audits and good leading example. Impressed by the effectiveness of a good laid process and system.
Disc : Invested.
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Can anyone please help me with this - hdfc bank’s revenue (QoQ) of corporate banking didn’t increase much Vs sizeable increase in PBT of Corporate Banking(QoQ)… How ??
Why is HDFC Bank ROE consistently declining?
Lower leverage.
ROE= ROA*Leverage
ROA has held up well, leverage is coming down.
A good proxy is the Capital Adequacy Ratio, which has gone up the last few years, implying they’re holding more equity and borrowing less, hence leverage going down.
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The Reserve Bank of India (RBI) has retained State Bank of India, ICICI Bank and HDFC Bank as domestic systemically important banks (D-SIBs) or banks that are considered as “too big to fail”.
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Thread on the new NUE consortium that HDFC Bank is a part of. Colleagues in their group are Airtel and Kotak with Tata and Sons being promoter.
Exciting times ahead to see how well can UPI be monetised.
What would be of more benefit - being promoter or being license holder? e.g. Reliance applied for license along with Google +
Prsnl experience :
So I launched yet another of my startup and was looking to close a current account for new company. As many of you would have experienced, once your company gets registered, you are flooded with mails and calls from all the banks.
Except.
HDFC Bank. (I had just received one Watsapp from the bank).
Now being a long term investor in the bank as part of my core holdings, I wanted to open an account with HDFC Bank only.
I responded to the Watsapp, when I had announced to everyone else that I have opened the account with HDFC. 48 hours and No response. Cool.
I spoke to my accountant to get the bankers speak to me.
He got me a number and said someone would speak to me. There comes most interesting part.
I was informed that the bank would take 6-7 working days just to open a Current Account.
Seriously
That too in the digital era. All other banks actually promised me to open in 2 days.
I was in a hurry. So I went ahead with another bank.
My questions on HDFC Bank which I am pondering on :
- As per the banks representative : Their process is still manual. (Wow interesting).
- Are they not interested in Current account, which is considered to be most lucrative by other banks.
- Are they only focussed only in Salary accounts. Decades ago my employer got me one with the bank.
- When other banks are well ahead on Tech, why their process is still lagging.
Would like to hear from other members as well.
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discl - invested
Which company is providing technical support to NUE consortium digital part
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I also had a this kind of experience. For our new business we wanted to open a current account but when I went to HDFC bank, manager said me (after all discussion) in last that until you have another bank current account we can not open your account here. I was surprised that does that mean that they do not want new customers and first want to give chance to other bank to grab this opportunity?
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