Top five key takeaways from HDFC Bank Q2 results; stock up 50% in 2017

HDFC Bank's Q2 numbers were largely in line with expectations, although there were some concerns about asset quality.

The stock has been on investors’ radar for some time now, thanks to stable asset quality and consistent performance with respect to earnings growth. The stock has gained over 50 percent so far in the year 2017.

HDFC Bank surged to fresh 52-week high ahead of results but pared gains soon after they were announced weighed down by concerns over asset quality.

The stock hit a 52-week high of Rs1876.95. At 01:00 pm; it was trading 0.14 percent lower at Rs1860.

We have collated a list of top five takeaways from HDFC Bank Q2 results:

Net Profit:

Net Profit for India’s largest private sector bank rose 20 percent on a year-on-year (YoY) basis to Rs4,151.03 crore which was slightly higher than a CNBC-TV18 poll of Rs4,143.50 crore.

The private sector bank reported a net profit of Rs3544.33 crore in the corresponding quarter of last fiscal.

Net Interest Income:

Net Interest Income (NII) or the total interest earned less interest expended grew by 22 percent for the quarter ended September which was slightly higher than a CNBC-TV18 poll of Rs9664.10 crore, driven by average asset growth of 17.6 percent and a core net margin for the quarter of 4.3 percent.

HDFC Bank reported an NII of Rs7993.60 crore for the corresponding quarter of last fiscal.

Other Income:

Other income or non-interest revenue rose by 24.3 percent YoY to Rs3605.90 crore which is 27 percent of net revenues for the quarter ended September 30. It grew by 24.3 percent to Rs2901 crore in the corresponding quarter ended September.

The 4 components of other income include fees and commissions of Rs2614 crore, foreign exchange and derivative revenue of Rs384 crore, gain on revaluation/sale of investments of Rs355.90 crore, and miscellaneous income of Rs 252 crore.

Asset Quality:

Gross non-performing assets (GNPA) stood at 1.26 percent of gross advances as on September 30, compared to 1.24 percent reported as on June 30 and 1.02 percent recorded in the corresponding quarter of last fiscal.

The bank participated in a project loan where the bank had 2.3 percent share underwent flexible structuring under the 5:25 regulatory framework as approved by the Joint Lender Forum (JLF) in February 2016.

Capital Adequacy:

The Banks’ total capital adequacy (CAR) as per BASEL III guidelines was at 15.1 percent as on September 30 as against a regulatory requirement of 10.25 percent.