HDFC Bank (NYSE:HDB) Issues Earnings Results

Key Points

• HDFC Bank met earnings expectations: quarterly EPS was $0.40, in line with consensus, while revenue of $5.10 billion exceeded the $4.92 billion estimate.
• Business momentum and asset quality improved: deposits grew 18.8% year over year, AUM rose 15.3%, and GNPA remained contained at 1.11%. Management said net interest margins may have bottomed at 3.32%.
• Funding remains a concern: one-off retail deposit outflows, continued wholesale funding use, and an LCR of 113% highlight the need to rebuild core retail liabilities. Analysts’ average rating is “Hold,” with a $26.10 price target.

HDFC Bank (NYSE:HDB - Get Free Report) announced its quarterly earnings results on Saturday. The bank reported $0.40 earnings per share (EPS) for the quarter, hitting the consensus estimate of $0.40, reports. HDFC Bank had a return on equity of 11.84% and a net margin of 15.96%. The company had revenue of $5.10 billion during the quarter, compared to the consensus estimate of $4.92 billion.

Here are the key takeaways from HDFC Bank's conference call:

• Business momentum improved: deposits rose 18.8% year over year and AUM increased 15.3%, while retail disbursements, credit-card issuance, and MSME lending accelerated. Management also cited stronger branch productivity and faster service turnaround times.
• Asset quality remained resilient, with GNPA at 1.11% and credit costs at 44 basis points. Reported quarterly profit was approximately INR 19.5 billion, up 12.7% excluding trading gains, with ROA holding near 1.8%.
• Management indicated that net interest margins may have reached a bottom at 3.32%, with repricing of the largely floating-rate loan book expected to provide a tailwind from the next quarter. However, the full-quarter cost impact of FCNR deposits will partly offset this benefit.
• Incoming CEO Anup Bagchi said he will first consult regulators, customers, shareholders, and employees before presenting priorities on growth, margins, asset quality, productivity, and capital deployment in the coming months.
• Liability metrics remain an area of concern: retail deposit momentum was obscured by large one-off outflows, the bank continued using wholesale funding including certificates of deposit, and LCR stood at 113%. Management said it aims to keep LCR around 110%–120% while rebuilding core retail liabilities.

HDFC Bank Stock Performance

NYSE HDB opened at $23.84 on Monday. The stock has a market capitalization of $122.32 billion, a price-to-earnings ratio of 14.02, a PEG ratio of 1.16 and a beta of 0.61. The stock's 50 day moving average price is $22.91 and its two-hundred day moving average price is $24.26. HDFC Bank has a 52 week low of $21.70 and a 52 week high of $37.45.

Analyst Ratings Changes

Several research firms have recently weighed in on HDB. The Goldman Sachs Group initiated coverage on HDFC Bank in a report on Friday, August 21st. They set a "buy" rating on the stock. Weiss Ratings cut HDFC Bank from a "hold (c-)" rating to a "sell (d+)" rating in a research note on Friday, September 25th. HSBC downgraded shares of HDFC Bank from a "buy" rating to a "hold" rating and dropped their target price for the stock from $30.80 to $26.10 in a report on Monday, August 31st. Zacks Research raised shares of HDFC Bank from a "strong sell" rating to a "hold" rating in a research note on Friday, July 17th. Finally, Wall Street Zen cut shares of HDFC Bank from a "hold" rating to a "sell" rating in a report on Saturday, July 18th. One research analyst has rated the stock with a Buy rating, two have assigned a Hold rating and one has assigned a Sell rating to the company. According to data from MarketBeat.com, the company has an average rating of "Hold" and an average price target of $26.10.

HDFC Bank Company Profile

HDFC Bank Limited is an Indian banking and financial services company headquartered in Mumbai, India. Established in 1994, the bank provides services to individuals, businesses, corporations and institutions through a broad network of physical branches, ATMs and digital banking channels.

Its principal offerings include savings and current accounts, deposits, personal and home loans, vehicle and consumer financing, business and commercial lending, credit and debit cards, payments, investment and wealth-management services, and foreign-exchange and treasury products.