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HDFC Bank leads in asset quality terms; positively surprised by recovery trajectory: Edelweiss

Updated : January 18, 2021 11:35 AM IST

HDFC Bank is leading in terms of asset quality, said Santanu Chakrabarti, Head-Banking, Financial Services and Insurance (BFSI) Research & Senior VP at Edelweiss Financial Services, on Monday.

The private sector lender HDFC Bank on Saturday reported 18.1 percent year-on-year (YoY) rise in consolidated net profit to Rs 8,758.3 crore for the December quarter.

Asset quality of the bank improved as the gross non-performing assets (NPA) declined 189 bps to 0.81 percent of gross advances while net NPA fell 8 bps to 0.09 percent of net advances as of December 2020.

Speaking in an interview to CNBC-TV18, Chakrabarti said, “We also have to keep in mind that this is a bank which has been guiding for lower numbers of stress than most other large banks all through the crisis.”

“We have increased valuation multiple from 3.7x to 4.1x for HDFC Bank,” he said.

According to him, numbers could worsen for banking sector going forward.

“The numbers could worsen for the sector as a whole and for HDFC Bank as supporting structure, so to say, from a regulatory point of view over the next 6 months in terms of recognition go away, but nevertheless probably the most impressive performance in the sector as far as asset quality is concerned,” said Chakrabarti.

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