Overall loan growth (19% y-o-y) remained steady. The individual loan segment (up 24% y-o-y) continued to drive loan growth. In this segment, HDFC continues to gain market share from banks (bank lending in individual home loans grew 18% y-o-y in November 2013). Corporate loan growth (up 10% y-o-y), while showing a small uptick, remained muted. Asset quality remained stable. Gross NPAs declined (2 bps q-o-q) and credit costs remained negligible (6 bps). Operating cost growth (17% y-o-y) was broadly in line with asset growth (19% y-o-y).
HDFC has maintained a relatively cautious approach toward corporate lending compared with banks. Bank lending to commercial real estate (up 19% y-o-y in November 2013) continues to grow at a relatively faster pace than HDFCs corporate book (up 10% y-o-y). In our view, HDFCs slower corporate growth is a prudent strategy to avoid credit quality stress in the current environment. Management has indicated the outlook for corporate loan growth going forward still remains uncertain.
Why overweight HDFCs best-in-class operating capabilities, strong performance in the high-return corporate portfolio and stable spreads and asset quality underline it leadership position. Its life insurance and AMC businesses continue to retain leadership role in a tough environment.