HDFC Bank posts the highest operating profit in three years

It grew 27% in 4QFY17.

According to Maybank Kim Eng, HDFC Bank (HDFCB) reported a strong 4QFY17. Operating profit grew 27% YoY, highest in the last 12 quarters. Domestic loan growth of 24% YoY was a strong rebound from the weak 3Q. Underlying trends in other parameters such as NIM, CASA deposits, fee income and asset quality witnessed improvement.

Here's more from Maybank Kim Eng:

Loan growth rose 19% YoY (3Q: 14% YoY). Growth was led by retail loans which grew at a robust 27% YoY. Some of the pockets that witnessed strong growth were SME, personal and credit cards. HDFCB continues to gain market share by outpacing system.

Its extended branch network of 4,700, complete product suites and digital offerings are aiding growth. Some of these benefits rubbed off on CASA ratio, which improved handsomely to 48% (up 5ppts YoY). Low cost of funds aided NIMs expansion by 20bps QoQ to 4.3%.

HDFCB made a one-time provision of INR2.5b relating to NPLs which were allowed as standard loans under regulators dispensation during the demonetisation period.

As a result, loan loss provisions jumped 90% YoY to INR12.6b. However, asset quality did not see any material change. Gross NPLs stood at 1.1% and net NPLs at 0.3%.