HDFC Bank 4Q FY 2013

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Please refer to important disclosures at the end of this report 1

4QFY2013 Result Update | Banking

April 23, 2013

Particulars (` cr) 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy)NII 4,295 3,982 7.9 3,561 20.6Pre-prov. profit 2,963 3,121 (5.1) 2,527 17.3

PAT 1,890 1,859 1.7 1,453 30.1Source: Company, Angel Research

HDFC Bank delivered yet another quarter of consistent performance on the

bottom-line front, with a growth of 30.1% yoy. On the operating front, while the

growth in NII came in relatively lower at 20.6% (similar to last quarter), the

non-interest income grew only by a moderate 10.7%, leading to a growth of

around 17% yoy in both operating income and pre-provisioning profits (on alike-to-like basis, post the accounting reclassification). On the asset quality front,

the bank reported stability, as its Gross and Net NPA levels, on an absolute basis,

came down sequentially by around 4-5% each, which aided it to report 27% yoy

lower provisioning expenses and clock earnings growth of 30% yoy.

Balance sheet growth robust; Asset quality stable: The bank registered a robustgrowth in its balance sheet, with net advances and deposits growing at 22.7%

and 20.1% yoy. Within its loan book, the bank managed to grow its retail

advances by 27.3% yoy; hence, the share of retail advances to overall loan book

increased by around 200bp yoy and 300bp qoq to 56.9%. Within the retail loan

portfolio, a strong buildup was witnessed in Business banking, Personal loans and

Credit card loans, as these portfolios grew by 31.5%, 26.0% & 45.3% yoy

respectively.On the deposits front, the current and saving deposits accretion was

healthy, growing at 15.2% and 19.2% yoy, respectively. CASA ratio declined by

~100bp on a yoy basis to 47.4%. NIMs for the bank came in at 4.5%, higher by

20bp qoq and 10bp yoy, primarily on higher retail lending. The non-interest

income (excluding treasury) grew at a subdued 2.3% yoy, as fee income growth

came in moderate at 10.8% and income from exchange transactions declined by

38.1% yoy. The bank reported treasury gains of `65cr for the quarter compared

to a loss of `72cr in 4QFY2012. On the asset quality front, the bank reported

stability, as its Gross NPA ratio improved marginally by 5bp to 0.97%, while Net

NPA ratio remained flat at 0.2%. The PCR (excluding write-offs) for the bank

remained stable sequentially at 79.9%.

Outlook and valuation: HDFC Bank is currently trading at a one-year forwardP/ABV of 3.8x (3.3x FY2015E ABV), higher than its median of 3.5x (over FY2005-

13). We believe the current valuations largely factor in the positives, leaving

limited upside in the stock. Hence we maintain our Neutral rating on the stock.Key financials (standalone)Y/E March (` cr) FY2012 FY2013 FY2014E FY2015ENII 12,297 15,811 19,362 23,763% chg 16.6 28.6 22.5 22.7

Net profit 5,167 6,727 8,393 10,151% chg 31.6 30.2 24.8 20.9

NIM (%) 4.3 4.6 4.6 4.5

EPS (`) 22.0 28.3 35.3 42.7P/E (x) 31.3 24.4 19.5 16.2

P/ABV (x) 5.4 4.5 3.8 3.2

RoA (%) 1.7 1.8 1.9 1.8

RoE (%) 18.7 20.3 21.3 21.8

Source: Company, Angel Research

NEUTRALCMP `689

Target Price -

Investment Period -

Stock Info

Sector

Bloomberg Code

Shareholding Pattern (%)

Promoters 22.8

MF / Banks / Indian Fls 8.6

FII / NRIs / OCBs 51.6

Indian Public / Others 17.0

Abs. (%) 3m 1yr 3yr

Sensex (4.2) 12.2 8.4

HDFC 5.0 26.5 77.3

52 Week High / Low 705/482

Beta 0.9

Banking

Market Cap (`cr) 164,087

Avg. Daily Volume 174,119

Reuters Code HDBK.BO

HDFCB@IN

BSE Sensex 19,179

Nifty 5,837

Face Value (`) 2

Vaibhav Agrawal022 3935 7800 Ext: 6808

[email protected]

Sourabh Taparia022 3935 7800 Ext: 6872

[email protected]

Akshay Narang022 3935 7800 Ext: 6829

[email protected]

Harshal Patkar022 3935 7800 Ext: [email protected]

HDFC BankPerformance Highlights

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HDFC Bank | 4QFY2013 Result Update

April 23, 2013 2

Exhibit 1:4QFY2013 performance (standalone)Particulars (` cr) 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy) FY2013* FY2012* % chg (yoy)Interest earned 9,324 8,890 4.9 7,561 23.3 34,746 27,286 27.3- on Advances / Bills 7,087 6,904 2.6 5,783 22.5 26,504 20,537 29.1- on investments 2,096 1,893 10.7 1,728 21.3 7,820 6,505 20.2

- on balance with RBI & others 78 68 14.9 45 73.8 282 137 105.4

- on others 64 25 152.3 5 1,172.1 141 108 30.2

Interest Expended 5,029 4,909 2.4 4,000 25.7 19,254 14,990 28.4Net Interest Income 4,295 3,982 7.9 3,561 20.6 15,493 12,297 26.0Other income 1,804 1,928 (6.4) 1,629 10.7 6,606 5,244 26.0Other income excl. treasury 1,739 1,792 (3.0) 1,700 2.3 6,445 5,440 18.5

- Fee & commission income 1,383 1,402 (1.4) 1,247 10.8 5,137 4,276 20.1

- Treasury income 65 136 (52.2) (72) - 161 (196) -

- Forex & derivative income 201 258 (21.9) 325 (38.1) 1,010 1,139 (11.3)

Operating income 6,099 5,909 3.2 5,190 17.5 22,099 17,540 26.0Operating expenses 3,136 2,788 12.5 2,664 17.7 10,862 8,590 26.5- Employee expenses 1,005 1,004 0.1 928 8.3 3,965 3,400 16.6

- Other Opex 2,131 1,784 19.4 1,735 22.8 6,897 5,190 32.9

Pre-provision Profit 2,963 3,121 (5.1) 2,527 17.3 11,236 8,950 25.5Provisions & Contingencies 301 405 (25.8) 412 (27.0) 1,486 1,437 3.4

PBT 2,662 2,716 (2.0) 2,115 25.9 9,751 7,513 29.8Provision for Tax 772 857 (9.9) 662 16.7 3,024 2,346 28.9

PAT 1,890 1,859 1.7 1,453 30.1 6,726 5,167 30.2Effective Tax Rate (%) 29.0 31.6 (255)bp 31.3 (228)bp 31.0 31.2 (21)bp

Source: Company, Angel Research, Note: * figures (before PBT) not comparable as FY2013 numbers as per revised accounting practices

Exhibit 2:4QFY2013 Actual vs. estimatesParticulars (` cr) Actual Estimates Var. (%)Net interest income 4,295 4,099 4.8

Other income 1,804 1,903 (5.2)

Operating income 6,099 6,002 1.6Operating expenses 3,136 2,848 10.1

Pre-prov. profit 2,963 3,154 (6.1)Provisions & cont. 301 319 (5.8)

PBT 2,662 2,835 (6.1)

Prov. for taxes 772 943 (18.1)

PAT 1,890 1,892 (0.1)Source: Company, Angel Research

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April 23, 2013 3

Exhibit 3:4QFY2013 performance analysisParticulars 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy)Balance sheetAdvances (`cr) 239,721 241,493 (0.7) 195,420 22.7Deposits (`cr) 296,247 284,119 4.3 246,706 20.1

Credit-to-Deposit Ratio (%) 80.9 85.0 (408)bp 79.2 171bp

Current deposits (` cr) 52,310 47,048 11.2 45,408 15.2

Saving deposits (`cr) 88,211 81,942 7.7 73,998 19.2

CASA deposits (` cr) 140,521 128,990 8.9 119,406 17.7

CASA ratio (%) 47.4 45.4 203bp 48.4 (97)bp

CAR (%) 16.8 17.0 (20)bp 16.5 30bp

Tier 1 CAR (%) 11.1 10.9 20bp 11.6 (50)bp

Profitability Ratios (%)Reported NIM 4.5 4.3 20bp 4.4 10bp

Cost-to-income ratio 51.4 47.2 424bp 51.3 10bp

Asset qualityGross NPAs (` cr) 2,335 2,432 (4.0) 1,999 16.8

Gross NPAs (%) 1.0 1.0 (3)bp 1.0 (5)bp

Net NPAs (`cr) 469 496 (5.4) 352 33.1

Net NPAs (%) 0.2 0.2 0bp 0.2 0bp

Provision Coverage Ratio (%) 79.9 79.6 30bp 82.4 (246)bp


Loan growth remains above industry

During 4QFY2013, the bank registered an above-industry average growth in

advances at 22.7% yoy, which was largely aided by robust traction in its retail loan

portfolio (up 4.9% qoq and 27.3% yoy).Within the retail loan portfolio, a strong

buildup was witnessed in Business banking, Personal loans and Credit cards

advances, as these portfolios grew by 31.5%, 26.0% & 45.3% yoy respectively.

Considering the current systemic stress in the CVCE industry, the bank moderated

its CVCE loan book by 1.6% qoq. Gold loan portfolio grew by 64.5% yoy and now

constitutes 3.6% of the total retail advances (2.0% of total loan book).

Overall, higher retail lending resulted in share of retail advances to overall loan

book increasing by around 200bp yoy and 300bp qoq to 56.9%.Within the retail

loan book, the share of unsecured advances (Personal loans and Credit cards)

reduced sequentially to 20.2% from 20.6%.

On the liabilities front, the deposit growth was healthy at 20.2% yoy. The current

and saving deposits accretion was healthy, growing at 15.2% and 19.2% yoy,

respectively. CASA ratio declined by around 100bp on a yoy basis to 47.4%.

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Exhibit 4:Strong growth in retail loans aides robust advance growthParticulars (` cr) 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy) % to totalAuto Loans 30,942 30,041 3.0 26,398 17.2 23.5

CVCE 16,106 16,371 (1.6) 13,050 23.4 12.3

Two Wheelers 3,008 2,943 2.2 2,537 18.6 2.3

Personal Loans 17,500 16,809 4.1 13,891 26.0 13.3

Business Banking 24,516 23,081 6.2 18,639 31.5 18.7

Loans Against Securities 1,210 1,063 13.8 1,046 15.7 0.9

Credit Cards 10,114 10,011 1.0 6,960 45.3 7.7

Home loans 16,783 15,896 5.6 14,259 17.7 12.8

Others 11,243 13,743 (18.2) 10,346 8.7 8.6

Gold 4,965 4,703 5.5 3,018 64.5 3.6

Retail Advances 136,388 129,958 4.9 107,126 27.3 100.0Source: Company, Angel Research

NIMs higher sequentially by 20bp

NIMs for the bank came in at 4.5%, higher by 20bp qoq and 10bp yoy, primarily

on higher retail lending.

After going relatively slow on branch expansion in 9MFY2013 with addition of 232

branches, it added 286 branches in 4QFY2013, thereby taking the total branch

additions in FY2013 to 518 and the total branch network to 3,062. Of the total

branch additions in FY2013, around 35% were micro branches (manned by 2-3

employees). Regionally, most of the expansion came in semi-urban and rural

areas. The banks increased geographic presence along with healthy network

expansion should aid it in maintaining an above-system average retail loan growth

on the asset side and CASA accretion on the liability side.

Exhibit 5:Business growth remains robust


Exhibit 6:Reported NIM remains above 4%

Source: Company, Angel Research, Note:*as per old reporting practices.

22.2

18.3

21.5

22.0

22.9

18.8

24.3

22.2

22.7

20.1

-

7.5

15.0

22.5

30.0

Advances Deposits

4QFY12 1QFY13 2QFY13 3QFY13 4QFY13(%)

4.40

4.30

4.20

4.30

4.50

4.0

4.1

4.2

4.3

4.4

4.5

4.6

4QFY12 1QFY13* 2QFY13* 3QFY13 4QFY13

(%)

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April 23, 2013 5

Exhibit 7:CASA ratio lower by 100bp yoy


Exhibit 8:CASA growth remains healthy for the bank


Exhibit 9:Capital adequacy remains healthy


Exhibit 10:Branch network growth picks up in 2HFY13


Non-interest income (excl. treasury) grew at subdued pace due

to decline in forex income, as fee income growth came in

moderate

During 4QFY2013, the non-interest income (excluding treasury) for the bank grew

at a subdued pace of 2.3% yoy, as fee income growth came in moderate at 10.8%

and income from exchange transactions declined by 38.1% yoy. Decline in forex

income was due to lower customer volumes owing to lower exchange rate volatility

during the quarter. The bank reported treasury gains of `65cr for the quarter

compared to a loss of `72cr in 4QFY2012. Overall, other income for the bank

grew at a moderate pace of 10.7% yoy, during the quarter.

Exhibit 11:Non-interest income (excl. treasury) grew at subdued paceParticulars (` cr) 4QFY13 3QFY13 % chg (qoq) 4QFY12 % chg (yoy)Fees & Commission 1,383 1,402 (1.4) 1,247 10.8

Treasury Income 65 136 (52.2) (72) (190.8)

Forex Income & Others 201 258 (21.9) 325 (38.1)

Other 155 132 17.2 128 21.0

Other income 1,804 1,928 (6.4) 1,629 10.7Other income excl. treasury 1,739 1,792 (3.0) 1,700 2.3


48.4

46.0 45.945.4

47.4

40.0

43.0

46.0

49.0

4QFY12 1QFY13 2QFY13 3QFY13 4QFY13

(%)

26.2

17.7

27.2

19.2

-

10.0

20.0

30.0

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

4QFY13

CASA growth (%) SA growth (%)

11.6 10.9 11.4 10.9 11.1

4.94.6

5.6 6.1 5.7

16.515.5

17.0 17.0 16.8

-

5.0

10.0

15.0

20.0


Tier-I CAR (%) Tier-II CAR (%)

2,5

44

2,5

64

2,6

20

2,7

76

3,0

62

8,9139,709

10,316 10,49010,743

1,500

3,500

5,500

7,500

9,500

11,500

1,000

1,500

2,000

2,500

3,000

3,500


Branches ATMs (RHS)

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April 23, 2013 6

Asset quality remains stable

On the asset quality front, the bank reported stability, as its Gross NPA ratio

improved marginally by 5bp to 0.97%, while the Net NPA ratio remained flat at

0.2%. During FY2013, the annual slippage rate for the bank remained stable at

1.0%. However, considering higher systemic stress in the CVCE industry, the bank

too witnessed higher delinquencies in itsCVCE portfolio.

During the quarter, the bank had to make higher specific provisions, which

impaired its ability to make floating provisions, as it had made in the past. During

4QFY2013, the bank made floating provision of `50cr, thereby taking its

outstanding floating provisions to around `1,835cr. The PCR (excluding write-offs)

for the bank remained stable sequentially at 79.9%.

Exhibit 12:Asset quality trends


Accounting practices revised during the quarter

During the quarter, the bank revised its accounting practices following a directive

from the RBI. It re-classified commission paid to sales agents as operating

expenses and commission received from dealer/manufacturer under other income,

as against its earlier practice of adjusting the net commission (commission received

minus the commission paid to sales agent) from interest income. Further, itre-classified direct charge offs and recoveries from written off accounts, hitherto

included under provisioning expenses, to operating expenses and other income,

respectively. These changes in accounting practices resulted in an increase in NII

and other income, and a corresponding increase in operating expenses and

provisioning expenses for the bank. We have recalibrated our Income statement

estimates to factor in the revision in the accounting practices.

1.0

1.0

0.9

1.0

1.0

0.2

0.2

0.2

0.2

0.2

82.481.0 81.9

79.6 79.9

60.0

70.0

80.0

90.0

0.0

0.3

0.6

0.9

1.2

1.5


Gross NPAs (%) Net NPAs (%) PCR (Calc, %, RHS)

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April 23, 2013 7

Investment arguments

Strong capital adequacy, expanding network, to sustain traction

in credit market share and CASA deposits, respectively

As of 4QFY2013 the banks capital adequacy stood strong at 16.8%, with

tier-1 ratio at a comfortable 11.1%. During the quarter, the bank raised

USD500mn through 5yr tier-I bonds. On the back of such strong CAR, we feel the

bank is well positioned to continue its growth path and increase its credit market

share over FY2014-15.

The banks strong and profitable growth over FY200512 was supported by

significant traction in the CASA market share (from 3.3% in FY2005 to ~6.0% in

FY2012). The dominant transaction banking business lies at the core of the banks

strength in CASA deposits. Moreover, aided by the merger of the Centurion Bank of

Punjab, the banks branch network moved up at a 30% CAGR during FY200612.

In line with the network expansion witnessed in the previous two years, the bank

added more than 500 branches and 1,830 ATMs this year, taking the total count

of branches to 3,062 and ATMs to 10,743. During the past one year, the bank

increased its presence in ~450 new towns/cities and also opened 193 micro

branches manned by 2-3 employees to further increase its rural penetration. The

banks increased geographic presence along with healthy network expansion

should aid it in maintaining above system-average retail loan growth on the asset

side and CASA accretion on the liability side.

Comprehensive product portfolio, effective cross-selling to

sustain traction in fee income

Apart from the traditional CEB (commission, exchange & brokerage) and forex

income, the bank earns substantial fee income from transaction banking, cards

and third-party distribution, among others. Overall, the banks core fee income

posted a 27.8% CAGR over FY200812 and stands at 1.8% of average total assets

(ATA) for FY2013, one of the best in the sector offering another significant

competitive advantage to the bank. The banks major proportion of fee income

(~80-90%) comes from the retail asset side. Strong growth in retail loan book over

the past year (27.3% yoy) coupled with potential fee income revenue from new

branch additions (though with a lag) should help the bank maintain its fee income

to average assets at 1.8% over FY2014-15 as well.

Stable asset quality

The bank has been able to improve its asset quality consistently, as reflected in the

decline in slippages, ie from 5.2% in FY2009 to 1.0% in FY2013. Provisions to

average assets also declined from 1.2% in FY2009 to 0.5% in FY2013. The bank

has been actively making floating rate provisions (cumulative of around `1,835cr,

as against `1,435cr a year ago) and going forward, even if specific credit costs

increase to normalized levels, the overall provisioning burden is expected to be

manageable due to the buffer created by these floating provisions.

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April 23, 2013 8

Valuations leave limited upside

We believe HDFC Bank is among the most competitive banks in the sector, with an

A-list Management at the helm of affairs, which has one of the best track records

in the sector. We believe the bank is well positioned for high qualitative growth,

with strong CAR, healthy 20%+ branch expansion, and robust asset quality. On

the back of this, in our view, the bank is set to further gain credit and CASA market

share.

However, HDFC Bank is currently trading at a one-year forward

P/ABV of 3.8x (3.3x FY2015E ABV), higher than its median of 3.5x (over

FY2005-13). We believe the current valuations largely factor in the positives,

leaving limited upside in the stock. Hence we maintain our Neutral rating on thestock.

Exhibit 13:Key assumptionsParticulars (%) Earlier estimates Revised estimatesFY2014 FY2015 FY2014 FY2015Credit growth 25.0 25.0 25.0 25.0

Deposit growth 25.0 25.0 25.0 25.0

CASA ratio 45.4 44.7 45.7 45.1

NIMs 4.4 4.4 4.6 4.5

Other income growth 21.0 23.7 21.4 22.0

Growth in staff expenses 22.5 25.0 17.5 20.0

Growth in other expenses 22.5 25.0 20.0 22.5

Slippages 1.2 1.2 1.2 1.3

Coverage ratio 76.9 76.9 79.6 79.6

Source: Angel Research

Exhibit 14:Change in estimatesParticulars (` cr)

FY2014 FY2015Earlierestimates Revisedestimates Var. (%) Earlierestimates Revisedestimates Var. (%)

NII 18,601 19,362 4.1 22,873 23,763 3.9

Non-interest income 7,958 8,320 4.5 9,847 10,153 3.1

Operating income 26,559 27,682 4.2 32,720 33,916 3.7Operating expenses 12,691 13,384 5.5 15,864 16,279 2.6

Pre-prov. profit 13,868 14,298 3.1 16,856 17,637 4.6Provisions & cont. 1,255 1,677 33.6 1,752 2,259 28.9

PBT 12,613 12,621 0.1 15,104 15,378 1.8

Prov. for taxes 4,287 4,228 (1.4) 5,134 5,227 1.8

PAT 8,326 8,393 0.8 9,970 10,151 1.8Source: Angel Research

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April 23, 2013 9

Exhibit 15:Angel EPS forecast vs. consensusYear (`) Angel forecast Bloomberg consensus Var. (%)FY2014E 35.3 35.8 (1.4)

FY2015E 42.7 44.7 (4.5)Source: Bloomberg, Angel Research

Exhibit 16:P/ABV band


Exhibit 17:P/E band


0

200

400

600

800

1,000

1,200

Apr-06

Sep-0

6

Feb-0

7

Jul-07

Dec-0

7

May-0

8

Oct-08

Mar-09

Aug-0

9

Jan-1

0

Jun-1

0

Nov-1

0

Apr-11

Sep-1

1

Feb-1

2

Jul-12

Dec-1

2

May-1

3

Oct-13

Mar-14

Price (`) 2.00x 2.75x 3.50x 4.25x 5.00x

0

150

300

450

600

750

900

1,050

1,200

J

an-0

5

A

ug-0

5

M

ar-06

O

ct-06

M

ay-0

7

D

ec-0

7

Jul-08

F

eb-0

9

S

ep-0

9

A

pr-10

N

ov-1

0

J

un-1

1

J

an-1

2

A

ug-1

2

M

ar-13

Price (`) 15x 20x 25x 30x

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April 23, 2013 10

Exhibit 18:HDFC Bank Premium/Discount to the Sensex (%)

Source: Bloomberg, Angel Research

Exhibit 19:Recommendation summaryCompany Reco. CMP(`) Tgt. price(`) Upside(%) FY2015EP/ABV (x) FY2015ETgt. P/ABV (x) FY2015EP/E (x) FY2013-15EEPS CAGR (%) FY2015ERoA (%) FY2015ERoE (%)AxisBk Buy 1,444 1,696 17.4 1.6 1.9 9.7 16.6 1.6 17.3

FedBk Neutral 451 - - 1.0 - 7.6 10.0 1.2 13.7

HDFCBk Neutral 689 - - 3.3 - 16.9 20.3 1.8 21.0ICICIBk* Accumulate 1,162 1,306 12.4 1.7 1.9 12.0 15.5 1.4 16.5

SIB Neutral 24 - - 0.9 - 5.3 11.4 1.0 17.1

YesBk Neutral 495 - - 2.1 - 10.3 14.9 1.3 22.1

AllBk Accumulate 137 155 12.8 0.5 0.6 3.8 12.6 0.8 14.2

AndhBk Neutral 93 - - 0.6 - 4.0 4.2 0.8 13.4

BOB Buy 692 815 17.7 0.7 0.9 4.8 17.0 1.0 16.0

BOI Accumulate 335 360 7.4 0.7 0.8 4.9 21.8 0.8 15.1

BOM Accumulate 50 56 11.4 0.6 0.6 3.8 14.8 0.6 15.6

CanBk Accumulate 437 461 5.5 0.7 0.8 5.1 14.0 0.8 14.1

CentBk Neutral 70 - - 0.6 - 3.9 42.8 0.6 13.3

CorpBk Buy 378 453 19.8 0.5 0.6 3.6 8.3 0.8 14.4

DenaBk Accumulate 95 101 6.6 0.5 0.6 3.6 4.3 0.8 15.3

IDBI# Accumulate 87 96 10.2 0.5 0.5 3.7 24.5 0.9 13.5

IndBk Buy 166 200 21.1 0.6 0.7 3.9 6.5 1.0 14.9IOB Buy 67 78 15.7 0.4 0.5 3.3 53.3 0.7 13.1

J&KBk Neutral 1,279 - - 1.0 - 6.4 (5.2) 1.2 16.0

OBC Neutral 280 - - 0.6 - 4.4 17.5 0.8 13.1

PNB Accumulate 778 889 14.2 0.7 0.8 4.4 12.4 1.0 16.3

SBI* Accumulate 2,287 2,567 12.2 1.3 1.4 8.2 16.4 1.0 17.0

SynBk Accumulate 119 130 9.1 0.6 0.7 4.1 (3.5) 0.7 15.2

UcoBk Neutral 66 - - 0.7 - 4.6 36.9 0.6 12.6

UnionBk Accumulate 237 264 11.3 0.7 0.8 5.0 21.2 0.8 15.3

UtdBk Accumulate 60 68 12.2 0.4 0.5 2.9 40.4 0.7 14.7

VijBk Neutral 52 - - 0.6 - 4.8 21.2 0.5 11.7

Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), #Without adjusting for SASF

(30)

(20)

(10)

0

10

20

30

40

5060

70

Mar-06

Oct-06

May-0

7

Dec-0

7

Jul-08

Feb-0

9

Sep-0

9

Apr-10

Nov-1

0

Jun-1

1

Jan-1

2

Aug-1

2

Mar-13

Premium/Discount to Sensex Avg. His tori cal Premium(%)

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Income statement

Y/E March (` cr) FY09 FY10 FY11 FY12 FY13 FY14E FY15ENet Interest Income 7,421 8,386 10,543 12,297 15,811 19,362 23,763- YoY Growth (%) 42.0 13.0 25.7 16.6 28.6 22.5 22.7Other Income 3,471 3,983 4,335 5,244 6,853 8,320 10,153- YoY Growth (%) 57.4 14.8 8.8 21.0 30.7 21.4 22.0

Operating Income 10,892 12,370 14,878 17,540 22,664 27,682 33,916- YoY Growth (%) 46.5 13.6 20.3 17.9 29.2 22.1 22.5

Operating Expenses 5,685 5,940 7,153 8,590 11,236 13,384 16,279- YoY Growth (%) 51.8 4.5 20.4 20.1 30.8 19.1 21.6

Pre - Provision Profit 5,207 6,430 7,725 8,950 11,428 14,298 17,637- YoY Growth (%) 41.2 23.5 20.2 15.9 27.7 25.1 23.4

Prov. & Cont. 1,908 2,141 1,907 1,437 1,677 1,677 2,259- YoY Growth (%) 35.6 12.2 (10.9) (24.6) 16.7 (0.0) 34.7

Profit Before Tax 3,299 4,289 5,819 7,513 9,751 12,621 15,378- YoY Growth (%) 44.6 30.0 35.7 29.1 29.8 29.4 21.8

Prov. for Taxation 1,054 1,340 1,892 2,346 3,024 4,228 5,227- as a % of PBT 32.0 31.3 32.5 31.2 31.0 33.5 34.0

PAT 2,245 2,949 3,926 5,167 6,727 8,393 10,151- YoY Growth (%) 41.2 31.3 33.2 31.6 30.2 24.8 20.9

Note: FY2013 onwards figures (before PBT) reflect revised accounting practices

Balance sheetY/E March (` cr) FY09 FY10 FY11 FY12 FY13 FY14E FY15EShare Capital 425 458 465 469 476 476 476

Reserves & Surplus 14,627 21,065 24,914 29,455 35,738 42,223 50,079

Deposits 142,812 167,404 208,586 246,706 296,247 370,309 462,886

- Growth (%) 41.7 17.2 24.6 18.3 20.1 25.0 25.0

Borrowings 2,686 7,012 7,447 13,250 20,820 25,678 31,759

Tier 2 Capital 6,478 5,904 6,947 10,597 12,186 11,882 11,585

Other Liab. & Prov. 16,243 20,616 28,993 37,432 34,864 43,177 53,883

Total Liabilities 183,271 222,459 277,353 337,910 400,332 493,745 610,667Cash Balances 13,527 15,483 25,101 14,991 14,627 16,664 20,830

Bank Balances 3,979 14,459 4,568 5,947 12,653 15,605 19,301

Investments 58,818 58,608 70,929 97,483 111,614 135,140 163,089Advances 98,883 125,831 159,983 195,420 239,721 299,651 374,564

- Growth (%) 55.9 27.3 27.1 22.2 22.7 25.0 25.0

Fixed Assets 1,707 2,123 2,171 2,347 2,703 3,234 3,880

Other Assets 6,357 5,955 14,601 21,722 19,014 23,451 29,005

Total Assets 183,271 222,459 277,353 337,910 400,332 493,745 610,667- Growth (%) 37.6 21.4 24.7 21.8 18.5 23.3 23.7

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April 23, 2013 13

Ratio analysis

Y/E March FY09 FY10 FY11 FY12 FY13 FY14E FY15EProfitability ratios (%)NIMs 4.9 4.3 4.4 4.3 4.6 4.6 4.5Cost to Income Ratio 52.2 48.0 48.1 49.0 49.6 48.3 48.0

RoA 1.4 1.5 1.6 1.7 1.8 1.9 1.8

RoE 16.9 16.1 16.7 18.7 20.3 21.3 21.8

B/S ratios (%)CASA Ratio 44.4 52.0 52.7 48.4 47.4 45.7 45.1

Credit/Deposit Ratio 69.2 75.2 76.7 79.2 80.9 80.9 80.9

CAR 15.1 17.4 16.2 16.5 16.7 15.4 14.2

- Tier I 10.2 13.3 12.2 11.6 11.9 11.5 11.0

Asset Quality (%)Gross NPAs 2.0 1.4 1.0 1.0 1.0 0.8 0.6

Net NPAs 0.6 0.3 0.2 0.2 0.2 0.2 0.1

Slippages 5.3 2.6 1.1 1.0 1.2 1.2 1.3

Loan Loss Prov. /Avg. Assets 1.0 1.0 0.3 0.2 0.3 0.3 0.3

Provision Coverage 68.4 78.4 82.5 82.4 79.9 79.6 79.3

Per Share Data (`)EPS 10.6 12.9 16.9 22.0 28.3 35.3 42.7

ABVPS (75% cover.) 70.2 94.0 109.1 127.5 152.2 179.5 212.5

DPS 1.7 2.4 3.3 4.3 5.5 6.9 8.3

Valuation RatiosPER (x) 65.3 53.5 40.8 31.3 24.4 19.5 16.2

P/ABVPS (x) 9.8 7.3 6.3 5.4 4.5 3.8 3.2

Dividend Yield 0.2 0.3 0.5 0.6 0.8 1.0 1.2

DuPont AnalysisNII 4.7 4.1 4.2 4.0 4.3 4.3 4.3

(-) Prov. Exp. 1.2 1.1 0.8 0.5 0.5 0.4 0.4

Adj. NII 3.5 3.1 3.5 3.5 3.8 4.0 3.9

Treasury 0.3 0.2 (0.0) (0.1) 0.0 0.0 0.0

Int. Sens. Inc. 3.7 3.3 3.4 3.5 3.9 4.0 3.9

Other Inc. 1.9 1.8 1.8 1.8 1.8 1.8 1.8

Op. Inc. 5.7 5.0 5.2 5.2 5.7 5.8 5.7

Opex 3.6 2.9 2.9 2.8 3.0 3.0 2.9PBT 2.1 2.1 2.3 2.4 2.6 2.8 2.8

Taxes 0.7 0.7 0.8 0.8 0.8 0.9 0.9

RoA 1.4 1.5 1.6 1.7 1.8 1.9 1.8Leverage 11.9 11.1 10.7 11.1 11.2 11.3 11.8

RoE 16.9 16.1 16.7 18.7 20.3 21.3 21.8Note: FY2013 onwards ratios reflect revised accounting practices

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HDFC Bank 4Q FY 2013

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