HDFC BANK 2023-24 Annual Report Analysis

Mon, 22 Jul

HDFC BANK has announced its results for the year ended March 2024. Let us have a look at the detailed performance review of the bank during the year 2023-24.

HDFC BANK Income Statement Analysis

• Interest income during the year rose 66.1% on a year-on-year (YoY) basis.
• Interest expenses were up by 98.2% YoY during the same period.
• Operating expenses increased by 195.5% YoY during the year.
• The bank's net interest income (NII) increased by 39.3% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a decline and stood at 3.6% in FY24 as against 4.3% in FY23.
• Other income increased by 266.7% YoY during the year.
• Net profit for the year increased by 39.3% YoY.
• Net profit margins during the year declined to 22.6% in FY24 from 26.9% in FY23.

HDFC BANK Income Statement – 2023-24

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Interest Income	Rs m	1,707,541	2,836,490	66.1%
Other Income	Rs m	339,121	1,243,458	266.7%
Interest Expense	Rs m	777,799	1,541,386	98.2%
Net Interest Income	Rs m	929,741	1,295,105	39.3%
Operating Expense	Rs m	515,337	1,522,693	195.5%
Pre-provision Operating Profit	Rs m	753,525	1,015,869	34.8%
Provisions & Contingencies	Rs m	292,038	361,404	23.8%
Profit before tax	Rs m	614,984	765,686	24.5%
Tax	Rs m	153,497	111,221	-27.5%
Profit after tax	Rs m	459,971	640,620	39.3%
Minority Interest	Rs m	-1,516	-13,845	-813.3%
Net Interest Margin	%	4.3	3.6
Net profit margin	%	26.9	22.6

Don't Miss: Key Information for Long-term Investors

HDFC BANK Balance Sheet Analysis

• The bank's deposits during FY24 stood at Rs 23,768.9 bn as compared to Rs 18,826.6 bn in FY23, thereby witnessing an increase of 26.3%.
• Advances for the year stood at Rs 25,658.9 bn as compared to Rs 16,619.5 bn during FY23, a rise of 54.4%.
• Cost of deposits for HDFC BANK rose 28.0% and stood at 4.2%, while yield on advances rose to 8.5%.
• The lender's investments rose to Rs 10,056.8 bn during the year from Rs 5,115.8 bn in FY23.
• Borrowing stood at Rs 7,306.2 bn, a growth of 184.8% as compared to previous year.
• Overall, the total assets and liabilities for FY24 stood at Rs 40,301.9 bn as against Rs 25,304.3 bn during FY23, thereby witnessing a rise of 59.3%.

HDFC BANK Balance Sheet – as on March 2024

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Networth	Rs m	2,883,203	4,537,425	57.4%
Advances	Rs m	16,619,493	25,658,914	54.4%
Deposits	Rs m	18,826,633	23,768,873	26.3%
Yield on advances	%	8.2	8.5
Cost of Deposits	%	3.3	4.2
Investments	Rs m	5,115,817	10,056,816	96.6%
Borrowings	Rs m	2,565,487	7,306,155	184.8%
Total Assets	Rs m	25,304,324	40,301,943	59.3%

Current Valuations for HDFC BANK

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 84.3, an improvement from the EPS of Rs 82.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,640.1, stands at 18.5 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 2.8 times, while the price to income ratio stands at 4.2 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Income per share (Unadj.)	Rs	306.0	373.4
Earnings per share (Unadj.)	Rs	82.4	84.3
Diluted earnings per share	Rs	60.5	84.2
Avg P/E ratio	Rs	18.2	18.5
Avg P/ABV ratio	Rs	4.4	2.8
Avg Market Cap	Rs	8,351,759	11,855,929
Dividends per share (Unadj.)	Rs	19.00	19.50

Ratio Analysis for HDFC BANK

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio improved and stood at 108.0x during FY24, from 88.3x during FY23. The credit/deposit ratio tells us how much money a bank has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The bank's debt to equity ratio decreased and stood at 6.85x during FY24, from 7.42x during FY23. The debt to equity ratio of a bank tells us how much debt a bank uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): HDFC BANK's capital adequacy ratio (CAR) was at 18.8% as on 31 March 2024 as compared to 19.3% a year ago. This ratio helps measure the financial strength of the bank or any finance company to meet their obligations using their assets and capital.

  A bank that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the bank's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a bank sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the bank is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that banks hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the bank deteriorated and stood at 14.1% during FY24, from 16.0% during FY23. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the bank deteriorated and stood at 1.59% during FY24, from 1.82% during FY23. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank deteriorated and stood at 15.15% during FY24, from 15.24% during FY23. The ROCE measures the ability of a bank to generate profits from its total capital (shareholder capital plus debt capital) employed in the bank.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a bank's gross NPAs to gross advances. HDFC BANK's gross NPA ratio stood at 1.2% as of 31 March 2024 compared to 1.1% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a bank's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the bank has made provisions.

  The net NPA ratio of HDFC BANK was 0.3% in financial year 2024. This compared with 0.3% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Credit/Deposit Ratio	x	88.3	108.0
Debt to Equity Ratio	x	7.4	6.8
Loans / Deposits	x	0.1	0.3
Capital Adequacy Ratio	%	19.3	18.8
Return on Equity	%	16.0	14.1
Return on Assets	%	1.8	1.6
Return on Capital Employed	%	15.2	15.2
% of Gross NPAs	%	1.1	1.2
% of Net NPAs	%	0.3	0.3
Yield on Advances	x	8.2	8.5
Yield on Investments	x	6.0	7.7

To see how HDFC BANK has performed over the last 5 years, please visit here.

HDFC BANK Share Price Performance

Over the last one year, HDFC BANK share price has moved down from Rs 1,675.7 to Rs 1,640.1, registering a loss of Rs 35.6 or around 2.1%.

Meanwhile, the S&P BSE BANKEX is trading at 60,018.3 (down 0.2%). Over the last one year it has moved up from 52,122.8 to 60,018.3, registering a gain of 7,895.5 points (up 15.1%).

Overall, the S&P BSE SENSEX is up 20.6% over the year.

(To know more, you can check out historical annual results for HDFC BANK here and quarterly results for HDFC BANK here)