Specialist in Indian Banking and Economic Research

Hemindra Hazari

Is a Securities & Exchange Board of India (SEBI) registered research analyst with over 25 years experience in the Indian capital markets with a specialization in banking and economy research and has managerial experience of establishing profitable equities business, leading and mentoring analysts.  He has worked with prominent foreign and domestic capital market firms such as UBS, Societe Generale, HSBC, ASK Raymond James  and Karvy Stock  Broking and is a regular guest on business media channels and is respected for his non-consensus view on stocks and the market.

HDFC Bank Q3FY21– Yet Another ‘Steady’ Quarter Underpinned by Strong Growth in Wholesale Loans

HDFC Bank – Update Does Little To Quell Fears

HDFC Bank Q4FY21:Covid Impacts Retail Book Even as Resolution of Retail Loans Keeps NPA's at Bay

Equity Bottom-Up

There are two features worth noting in <a href="https://www.smartkarma.com/entities/hdfc-bank-ltd-4b6b7a92-9087-468d-9dbe-ab169e77f014" target="_blank" data-smartkarma-citation="entities:558:1" rel="noopener">HDFC Bank (HDFCB IN)</a> 4QFY2021 results. The first is the continuing de-emphasis on retail loans. This was visible in the lower retail loan growth and the poor performance of HDB Financial Services, the non-bank finance subsidiary which is bearing the brunt of the Covid induced slowdown in the economy. The second is the inability of the Bank to provide any clarity on when the Reserve Bank of India (RBI) could lift the ban on selling of credit cards and sales from digital products.  The bank’s inability to provide the market with clarity is probably because it does not yet have that clarity itself, as the technical audit authorised by the regulator is still ongoing. The periodic digital disruptions to the bank’s customers, a symptom of larger problems of inadequate investment in infrastructure, may further prolong the ban.The bank’s results overall were commendable for the current economic environment (although this analyst continues to disapprove of the rise in deferred tax assets), as it appears to have its asset quality under control. However, its Achilles Heel appears to be its information technology infrastructure, which may take some time to stabilise and provide comfort to the banking regulator.

There are two features worth noting in HDFC Bank (HDFCB IN) 4QFY2021 results. The first is the continuing de-emphasis on retail loans. This was visible in the lower retail loan growth and the poor performance of HDB Financial Services, the non-bank finance subsidiary which is bearing the brunt of the Covid induced slowdown in the economy. The second is the inability of the Bank to provide any clarity on when the Reserve Bank of India (RBI) could lift the ban on selling of credit cards and sales from digital products.  The bank’s inability to provide the market with clarity is probably because it does not yet have that clarity itself, as the technical audit authorised by the regulator is still ongoing. The periodic digital disruptions to the bank’s customers, a symptom of larger problems of inadequate investment in infrastructure, may further prolong the ban.The bank’s results overall were commendable for the current economic environment (although this analyst continues to disapprove of the rise in deferred tax assets), as it appears to have its asset quality under control. However, its Achilles Heel appears to be its information technology infrastructure, which may take some time to stabilise and provide comfort to the banking regulator. 

HDFC Bank: Commendable Results but Technology Issues Remain