Share of HDFC Bank declined 3 per cent after the country's largest private sector lender reported weaker than expected results for the quarter ended June (Q1FY22).
HDFC Bank reported a 14.36 per cent growth in its consolidated net profit at Rs 7,922.09 crore. It had posted a consolidated net profit of Rs 6,927.24 crore in the corresponding quarter a year ago. However, the June quarter profit has dipped as against the preceding March quarter's Rs 8,433.78 crore.
The stock opened 2 per cent lower at Rs 1,491.00 against the previous close of Rs 1,521.70. Market cap of the bank fell to Rs 8,18,562.37 crore. The share stands higher than 200 day moving averages and lower than 5 day, 10 day, 20 day, 50 day, 100 day moving averages.
The private sector lender's total income increased to Rs 36,771 crore in April-June 2021, as compared to Rs 34,453 crore in the year-ago period.
The asset quality of the bank deteriorated as the gross non-performing assets stood at 1.47 per cent as of June 30, 2021, as against 1.36 per cent in the year-ago period and 1.32 per cent three months ago.
The EPS of the bank has increased to Rs 14.40 in June 2021 from Rs 12.60 in June 2020.
"The impact of COVID-19, including changes in customer behaviour and pandemic fears, as well as restrictions on business and individual activities, has led to significant volatility in global and Indian financial markets and a significant decrease in global and local economic activities. The disruptions following the outbreak, have led to a decrease in loan originations, the sale of third-party products, the use of credit and debit cards by customers, and the efficiency in collection efforts. This may lead to a continued rise in the number of customer defaults and consequently an increase in provisions thereagainst," the lender said.
"The extent to which the COVID-19 pandemic will continue to impact the Bank's results will depend on ongoing as well as future developments, which are highly uncertain, including, among other things, any new information concerning the severity of the COVID-19 pandemic, and any action to contain its spread or mitigate its impact whether government-mandated or elected by us," it added.
The bank currently holds floating provisions worth Rs 1,451 crore and contingent provisions of Rs 6,596 crore. Loan growth moderated sequentially at 1.3 per cent to Rs 11.47 trillion while deposit accretion was decent at 13.2 per cent YoY to Rs 1,34,000 crore," ICICI Securities said.
Motilal Oswal said that the asset quality has deteriorated marginally due to disruptions in collections on account of the second Covid wave. The bank continues to make additional contingent provisions to further strengthen its balance sheet.
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