Shares of India’s largest private sector lender HDFC Bank Ltd fell nearly 2% on Monday after it reported 33% year-on-year increase in its net profit at Rs 7,416.5 crore for the December quarter (Q3).
At 12:02 pm, shares of HDFC Bank were trading at Rs 1,260.75, down 1.4%, after hitting the day’s low of Rs 1,253,75. The stock has risen over 17% in the last one year compared with a nearly 13% rise in the Nifty 50 index.
HDFC Bank on Friday said Q3 net interest income grew 12.7% to Rs 14,172.9 crore compared with a year ago on loan growth of 19.9% and deposits growth of 25.2%.
Asset quality, however, weakened in the December quarter as gross non-performing assets (NPA) as a percentage of gross advances rose 4 basis points to 1.42% compared with the previous quarter, while net NPA jumped 6 bps to 0.48%. Provisions and contingencies also jumped 37.6% year-on-year to Rs 3,043.56 crore during the quarter.
After the earnings, Kotak Institutional Equities maintained ‘add’ rating on the HDFC stock with a target price of Rs 1,350. The brokerage firm highlighted that the share of unsecured loans is relatively high at 17% of the total loans, but added that early-warning non-performing loan (NPL) indicators are still stable.
Credit Suisse also maintained ‘outperform’ rating, while raising the target price to Rs 1,550 from Rs 1,400 per share earlier, saying that HDFC Bank should continue to allow for market share gains.
Meanwhile, HDFC Bank said Keki Mistry has ceased to be a director on its board as he has completed his 8-year tenure. “In terms of the provisions of section 10A(2A)(i) of Banking Regulation Act, 1949, no director of a banking Company, other than its Chairman or whole-time Director, by whatever name called, shall hold office continuously for a period exceeding eight years,” the bank explained.
Also, the bank will reportedly be sending a list of shortlisted candidates, who can replace the outgoing managing director Aditya Puri, to the Reserve Bank of India (RBI) by July-August.