How are you reading ‘s provisioning and profit numbers?
The provisioning number looks better than what was anticipated by the Street but net profit is again slightly lower than estimates. So, it clearly appears that at the operating level, there has been some sort of pressure. In addition, if I look at the overall asset quality, GNPA, I can see that there has been some sort of increase. That does not bode well. Overall, the numbers do not impress me. It appears that there was a genuine reason why the stock underperformed. Going forward, in the long term, we continue to remain optimistic about the stock.
What are you making of the numbers in terms of net interest margin, net interest income as well?
Of course, NIM softness in the previous quarter was because of an increase in contribution from the wholesale book which, to our understanding, should reverse going forward as the company will keep focussing more on the retail book. It is a matter of time before we will see the NIM of the company moving up. As far as overall earnings are concerned, on a YoY basis, there has been some sort of decline in terms of what was the anticipation.
How are you looking at the asset quality and provisions? Any cause of concern coming in over there?
The bank’s 1.28% GNPA looks to be decent to me if I compare it with other private banks. But yes, the kind of increase that we have seen in this quarter, it does not bode well. But going forward, we are quite sure that the company will work on it and the asset quality should improve. The company will continue to report decent CASA going forward. In the near term, the merger would be quite crucial because the underperformance that we have seen after the announcement of the merger is purely because of certain concerns with regard to deposit growth as well as possible contraction in NIM.
I understand the stock has underperformed in the last two to three years but if I look from a 10 years perspective, it still has delivered a 17% kind of CAGR in terms of returns to shareholders. So from a long-term perspective, I do not think so there is any big concern for the stock.
What could be the expectation in terms of stock moves that we could be seeing for HDFC Bank on Monday?
It is visible that the operational performance has not been up to the mark and probably all the analysts and the Street would be looking at that. I do not think the stock would see any sort of positive momentum on Monday. But the concall will give us more clarity.
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