HDFC Bank’s market capitalisation, currently at over USD 65 billion ($ 6500 crore), may rise to around USD 137 billion ($ 13,700 crore) by the year 2019-2020 under a bull run case scenario, said Goldman Sachs according to a Reuters report. The global investment bank points out the key driver in this growth will be the doubling of bank’s profit to $5 billion ($ 500 crore) by the year 2020-2021, as the country’s largest private sector lender leverages market share shift from state-owned banks and retail under-penetration using its large distribution network and low cost of funds.
“The bank’s positioning remains better compared to the near past to deliver a healthy 21 pct FY17-20 EPS compound annual growth rate, with higher visibility,” said Goldman Sachs in a note dated June 7.
Goldman Sachs also said that HDFC Bank’s retail broking and non-bank finance units could further add to the upside and that the shift of household savings from deposits to other financial products will aid fee growth for HDFC Bank’s broking business.
Shares of HDFC Bank reached a record high of Rs 1,659.40 today, up about 1.13 percent, and have gained about 36 per cent this year as of Wednesday’s closing price.
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HDFC Bank’s net profit for the fiscal fourth quarter of FY17 was at Rs 3,990 crore, broadly in line with the market expectations, while its net interest income was at Rs 9,055 crore. The bank’s net interest margin was up 20 basis points on a sequential basis to 4.3% in the quarter under review from 4.1%.
HDFC Bank fared well on the bad debts and stressed assets front too, with its Gross NPAs (non-performing assets) remaining flat quarter-on-quarter at 1.05% during the January – March quarter. Absolute gross NPAs were at Rs 5,885.7 crore in the quarter under review, up about 12.50% from Rs 5,232 crore in the preceding quarter. Its Net NPAs rose marginally to 0.33% in the quarter under consideration from 0.32% in the preceding three-month period.