HDFC Bank: Despite HDFC Bank’s shares opening positively, the lender’s Q4 profitability fell short of expectations due to increased provisioning. By 9:17 am, the stock was down 0.6% at Rs 1522.15. In Q4, the bank posted a standalone net profit of Rs 16,500 crore, compared to Rs 16,400 crore in the previous quarter.
According to LSEG data, Reuters analysts anticipated a profit of Rs 17,300 crore for the period under review.
Crucially, the bank’s merger with its parent company HDFC in July renders its results incomparable on a year-over-year basis.
The bank stated in a press release that provisions and contingencies surged to 135.1 billion rupees in the quarter from 42.17 billion rupees in the previous three months, citing the need to strengthen the balance sheet as a counter-cyclical measure.
Alongside its results, the lender proposed a dividend of Rs 19.5 per share (fully paid up at Rs 1 each), equivalent to 1950%, sourced from the net profits for the year ending March 31, 2024. This recommendation is subject to approval by the shareholders at the upcoming Annual General Meeting (AGM) of the Bank. The record date for determining dividend eligibility on equity shares is set for Friday, May 10, 2024. -HDFC Bank
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Which global brokerages advise following HDFC Bank’s Q4 results?
Almost all international brokerages have endorsed the stock following HDFC Bank’s Q4 earnings. Jefferies and Goldman Sachs have both issued a ‘buy’ recommendation on the stock, accompanied by an increased target price. Jefferies observed that although the lender’s Q4 profit of Rs 16,500 crore fell short of estimates, the Pre-provision operating profit (PPOP) was in line and adjusted for one-offs. EPS stood at Rs 21, and ROA at 1.9%. According to the brokerage, a key positive aspect was a slight increase in NIMs. It further noted that while deposit growth remained robust at 17% (adjusted for the merger), loan growth lagged at 12%.
