HDFC Bank (HDFCBANK)
Why the stock moved
Post-merger integration with HDFC Ltd showing strong synergies; NIMs improving with deposit growth outpacing advances.
In-depth analysis
HDFC Bank is successfully navigating the post-merger landscape with HDFC Ltd. The combined entity reported strong Q3 results with net profit of ₹16,512 crores, up 34% YoY. Net Interest Margin (NIM) improved to 3.60% from 3.45% previous quarter as deposit franchise strengthened. Retail loan growth robust at 16%, while asset quality remains best-in-class with GNPA at 1.24%.
Key highlights
- Merger Synergies: Cost synergies of ₹1,200 crores achieved in Q3
- Deposit Growth: 17% YoY deposit growth, CASA ratio at 39%
- NIM Expansion: NIM improved to 3.60%, up 15 bps QoQ
- Asset Quality: GNPA at 1.24%, best among large private banks
- Digital Push: 85% of transactions now digital, PayZapp users up 28%
Outlook
Management guides for 14-16% loan growth for FY25 with focus on retail and SME segments. NIM expected to stabilize around 3.5-3.6% range. Credit cost to remain low at 30-40 bps. Merger integration to complete by Q1 FY26 with full synergy benefits of ₹4,000+ crores annually. ROE target of 17-18% over medium term.
Risk factors
Regulatory challenges post-merger including priority sector lending norms. Rising competition in retail lending space. Potential asset quality stress in unsecured lending portfolio. Technology integration risks from merger.