1QFY2012 Result Update | Banking

July 19, 2011

HDFC Bank
Performance Highlights

Particulars (` cr) NII Pre-prov. profit PAT 1QFY12 2,848 2,033 1,085 4QFY11 2,839 2,097 1,115 % chg (qoq) 0.3 (3.0) (2.7) 1QFY11 2,401 1,749 812 % chg (yoy) 18.6 16.3 33.7

NEUTRAL
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Banking 1,19,114 1.0 520/396 74,268 2 18,654 5,614 HDBK.BO HDFCB@IN

`511 -

Source: Company, Angel Research

For 1QFY2012, HDFC Bank reported healthy 33.7% yoy growth in net profit to `1,085cr, marginally above our estimate of `1,073cr. Sequentially stable NIM along with a continued decline in provisioning expenses was the key highlight of the results. We maintain our Neutral recommendation on the stock. NIMs surprise positively; lower provisions continue to drive profit growth: Adjusting for the short-term one-off wholesale loans in 1QFY2011, gross advances growth remained healthy at 29.1% yoy. Deposits growth moderated to 15.4% yoy as the bank did not take an aggressive stance on raising wholesale deposits due to availability of liquidity and raising of tier-II capital. The banks CASA ratio remained the best in the industry at 49.1% (49.2% in 1QFY2011) in spite of the recent moderation in pace of growth. The bank was able to maintain its reported NIM at 4.2% despite the 50bp hike in saving rate and rising cost of funds for the system as a whole, due to its relatively aggressive hike in lending rates. The asset quality remained largely stable with gross NPA ratio improving marginally to 1.0% and sequentially flat net NPA ratio at 0.2%. Slippages were ~0.8-0.9% compared to 0.8% in FY2011. NPA coverage excluding technical write-offs remained healthy at 82.6% (82.5% in 4QFY11). The bank made `250cr of floating provisions during 1QFY2012 taking total outstanding pool to `980cr. Branch expansion continued the traction, with opening of 125 branches to take the network past 2,100 branches (18.6% growth since 3QFY2011). Outlook and valuation: We believe HDFC Bank is well positioned for high qualitative growth, with CASA and cost-to-income ratio returning to pre-CBoP levels. In our view, with strong capital adequacy and healthy branch expansion, the bank is set to further gain credit and CASA market share. However given the current valuations (3.4x FY2013E ABV), we believe that the positives are largely factored in the price. Hence, we maintain our Neutral recommendation on the stock.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 23.3 11.1 47.7 17.9

Abs. (%) Sensex HDFC Bank

3m (2.3) 10.3

1yr 4.0 24.6

3yr 36.8 147.1

Key financials
Y/E March (` cr) NII % chg Net profit % chg NIM (%) EPS (`) P/E (x) P/ABV (x) RoA (%) RoE (%)
Source: Company, Angel Research

FY2010 8,386 13.0 2,949 31.3 4.3 12.9 39.6 5.4 1.5 16.1

FY2011 10,543 25.7 3,926 33.2 4.4 16.9 30.3 4.7 1.6 16.7

FY2012E 12,576 19.3 5,144 31.0 4.3 22.1 23.1 4.1 1.7 18.8

FY2013E 15,588 24.0 6,686 30.0 4.3 28.7 17.8 3.4 1.7 20.9 Shrinivas Bhutda
022 3935 7800 Ext: 6845 [email protected]

Vaibhav Agrawal
022 3935 7800 Ext: 6808 [email protected]

Varun Varma
022 3935 7800 Ext: 6847 [email protected]

Please refer to important disclosures at the end of this report

HDFC Bank | 1QFY2012 Result Update

Exhibit 1: 1QFY2012 performance

Particulars (` cr) Interest earned - on Advances / Bills - on investments - on balance with RBI & others - on others Interest Expended Net Interest Income Other income Other income excl. treasury - Fee & commission income - Treasury income - Forex & derivative income Operating income Operating expenses - Employee expenses - Other Opex Pre-provision Profit Provisions & Contingencies PBT Provision for Tax PAT Effective Tax Rate (%)
Source: Company, Angel Research

1QFY12 4QFY11 % chg (qoq) 1QFY11 % chg (yoy) 5,978 4,514 1,411 25 28 3,130 2,848 1,120 1,161 923 (41) 230 3,968 1,935 781 1,154 2,033 444 1,590 505 1,085 31.7 5,469 4,151 1,297 19 2 2,629 2,839 1,256 1,247 1,001 9 245 4,095 1,998 733 1,265 2,097 431 1,666 551 1,115 33.1 9.3 8.8 8.8 33.3 1,076.7 19.1 0.3 (10.8) (6.9) (7.8) (6.2) (3.1) (3.2) 6.5 (8.8) (3.0) 2.9 (4.6) (8.4) (2.7) (132)bp 4,420 3,311 1,053 42 14 2,019 2,401 940 918 796 22 172 3,341 1,592 667 925 1,749 555 1,194 382 812 32.0 35.2 36.4 33.9 (41.2) 99.7 55.0 18.6 19.2 26.5 15.9 33.9 18.8 21.5 17.1 24.7 16.3 (20.1) 33.2 32.1 33.7 (25)bp

Exhibit 2: 1QFY2012 Actual vs. estimates

Particulars (` cr) Net interest income Other income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Company, Angel Research

Actual 2,848 1,120 3,968 1,935 2,033 444 1,590 505 1,085

Estimates 3,023 1,157 4,180 2,045 2,135 545 1,591 517 1,073

Var. (%) (5.8) (3.2) (5.1) (5.4) (4.8) (18.6) (0.1) (2.4) 1.1

July 19, 2011

HDFC Bank | 1QFY2012 Result Update

Exhibit 3: 1QFY2012 performance analysis

Particulars Balance sheet Advances (` cr) Deposits (` cr) Credit-to-Deposit Ratio (%) Current deposits (` cr) Saving deposits (` cr) CASA deposits (` cr) CASA ratio (%) CAR (%) Tier 1 CAR (%) Profitability Ratios (%) Reported NIM Cost-to-income ratio Asset quality Gross NPAs (` cr) Gross NPAs (%) Net NPAs (` cr) Net NPAs (%) Provision Coverage Ratio (%)
Source: Company, Angel Research

1QFY12 4QFY11 % chg (qoq) 1QFY11 % chg (yoy) 175,516 159,983 211,151 208,586 83.1 38,811 64,785 49.1 16.9 11.4 4.2 48.8 1,833 1.0 319 0.2 82.6 76.7 46,460 63,448 52.7 16.2 12.2 4.2 48.8 1,694 1.1 296 0.2 82.5 9.7 146,248 1.2 183,033 642bp (16.5) 2.1 (5.7) (363)bp 70bp (80)bp 0bp (4)bp 8.2 (1)bp 7.5 0bp 12bp 79.9 36,169 53,869 90,038 49.2 16.3 12.4 4.3 47.7 1,791 1.2 413 0.3 77.0 20.0 15.4 322bp 7.3 20.3 15.1 (13)bp 60bp (100)bp (10)bp 110bp 2.3 (17)bp (22.8) (10)bp 566bp

103,596 109,908

Strong advances growth with sequentially stable NIM

The banks net advances registered healthy 9.7% qoq growth. Adjusting for the short-term one-off wholesale loans in 1QFY2011, gross advances growth remained healthy at 29.1% yoy. There were a few chunky short term loans during the current quarter as well in the wholesale segment. Retail loans growth was also strong at 28.6% yoy despite the sharp rise in interest rates over the last one year. Deposits accretion slowed further during 1QFY2012 to 15.4% yoy (just 1.2% qoq) as the bank did not take an aggressive stance on raising wholesale deposits due to availability of liquidity and raising of tier-II capital of `3,650cr during the quarter. The pace of CASA deposits accretion for the bank has moderated considerably over the past several quarters the trend continued in 1QFY2012 as well with growth of 15.1% yoy (as compared to 26.2% in 4QFY2011 and 37.4% in 1QFY2011). The decline in growth of CASA deposits has been mainly caused by saving account deposits (growing by 20.3% yoy in 1QFY2012 as compared to 27.2% yoy in 4QFY2011 and 40.0% in 1QFY2011). Overall CASA ratio remains the best in the industry at 49.1% (49.2% in 1QFY2011). Going forward, with the banks aggressive branch expansion (18.6% growth in branch network over the past two quarters), we expect CASA market share gains to pick up. The key positive from the results was the resilience of NIMs. The bank did not witness sequential NIM compression in spite of the 50bp hike in savings rate in May and the sharp rise in cost of deposits over the past few quarters. The bank was relatively aggressive in hiking its base rate, which went up from an average of 8.0% in 4QFY2011 to 9.0% in 1QFY2012. Going forward also, we expect the

July 19, 2011

HDFC Bank | 1QFY2012 Result Update

bank to largely sustain its NIM close to FY2011 levels on the back of its strong funding mix.

Exhibit 4: Advances growth moderates due to one-offs

(%) 45.0 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12

Exhibit 5: NIM surprises positively

(%)

4.3 4.2 4.1

4.3 4.2 4.2 4.2 4.2

30.0

15.0

42.2

38.2

33.1

27.1

18.9

25.6

30.4

24.2

24.6

15.4

4.0 3.9

Advances
Source: Company, Angel Research

Deposits

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

Source: Company, Angel Research

Exhibit 6: CASA ratio stable on a yoy basis...

(%)

Exhibit 7: ...but growth continues to moderate

50.0 40.0 49.1 30.0 20.0 10.0 20.8 37.5 20.3 CASA growth (%) 42.9 SA growth (%)

55.0 49.2 50.6 50.5

52.7

50.0

45.0

11.6

15.1

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

40.0 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12

Source: Company, Angel Research

Source: Company, Angel Research

Fee income growth moderates

Other income growth for the bank was relatively muted at 12.3% yoy due to the treasury loss of `41cr as compared to profit of `22cr in 1QFY2011. Fee income growth moderated to 15.9% yoy from 23.2% in 4QFY2011 and 22.6% in 1QFY2011. However, forex and derivatives income remained healthy, registering growth of 33.9% yoy to `230cr.

Exhibit 8: Fee income moderate at 15.9% yoy

Particulars (` cr) Fees & Commission Treasury Income Forex Income & Others Other income Other income excl. treasury
Source: Company, Angel Research

1QFY12 923 (41) 230 1,112 1,153

4QFY11 % chg (qoq) 1,001 9 245 1,255 1,246 (7.8) (6.2) (11.4) (7.5)

1QFY11 % chg (yoy) 796 22 172 990 968 15.9 33.9 12.3 19.1

July 19, 2011

1QFY12

HDFC Bank | 1QFY2012 Result Update

Strong capital adequacy, branch expansion to drive credit and CASA market share gains, respectively
The banks total capital adequacy ratio (CAR) remained strong at 16.9%, with tier-1 constituting 67.5% of the total CAR. During 1QFY2012, the bank raised `3,650cr of tier-II capital by issuing upper tier-II bonds. On the back of this strong CAR, we expect the bank to further improve its credit market share over FY201213. Accordingly, we expect the bank to record credit growth of 26-27% each in FY2012 and FY2013. Notwithstanding the recent moderation in pace of CASA deposits accretion, we expect the same to pick up materially over the coming quarters on the back of the banks aggressive branch expansion. The strong traction in CASA growth over the past one year can be attributed to the banks aggressive branch expansion during FY200910 and increasing productivity of CBoPs branch network. During the past two quarters alone, the bank has added 331 branches (increase of 18.6%), taking its branch network to over 2,100. The bank has increased its presence to over 1,100 cities compared to 780 cities as of 1QFY2011. In FY2012, the bank has plans to open another 200 branches.

Exhibit 9: Healthy capital adequacy

Tier-I CAR (%) 20.0 15.0 10.0 5.0 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 12.4 12.7 12.1 12.2 11.4 16.3 3.9 17.0 4.3 Tier-II CAR (%) 16.3 4.2 16.2 4.0 16.9 5.5

Exhibit 10: Branch expansion gaining traction

Branches 2,250 2,000 1,750 1,500 4,393 4,721 5,121 5,471 ATMs (RHS) 5,998 6,500 5,750 5,000 4,250

1,725

1,765

1,780

1,986

1,250 1,000

2,111

3,500 2,750 2,000

1QFY11 2QFY11 3QFY11 4QFY11 1QFY12

Source: Company, Angel Research

Source: Company, Angel Research

Asset quality remains largely stable

The bank maintained its strong asset quality track record during 1QFY2012 as well. Slippages were flat at 0.8-0.9% as compared to FY2011s level. Gross and net NPAs rose by relatively lower 8.2% yoy and 7.5% yoy, respectively. Gross NPA ratio improved to 1.0% (1.1% in 4QFY2011), while net NPA ratio was flat sequentially at 0.2%. NPA provision coverage ratio remained at elevated levels at 82.6%, even without considering the floating provisions. The bank made floating provisions of `250cr during the quarter, to take the cumulative pool closer to `1,000cr. Restructured advances grew by ~9.7% qoq (at 0.4% of gross advances) to ~`700cr. The bank has a low (~2-3%) exposure to power sector with no direct exposure to State Electricity Boards (SEBs). The banks exposure to the real estate developers is also marginal at 0.5% of total loans.

July 19, 2011

HDFC Bank | 1QFY2012 Result Update

Exhibit 11: Stable asset quality

Gross NPAs (%) 1.5 1.2 0.9 0.6 0.3 77.0 77.8 81.4 82.5 82.6 80.0 Net NPAs (%) PCR (Calc, %, RHS) 90.0

70.0

1.2

0.3

1.2

0.3

1.1

0.2

1.1

0.2

1.0

0.2

0.0

60.0

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

Source: Company, Angel Research

Investment arguments
Strong capital adequacy, expanding network to sustain traction in credit market share and CASA deposits, respectively
In 1QFY2012, the banks capital adequacy stood strong at 16.9%, with tier-1 comprising a substantial 67.5%. On the back of this strong CAR, we expect the bank to increase its credit market share over FY201213. Accordingly, we expect the bank to record credit growth of 26-27% each in FY2012 and FY2013. The banks strong and profitable growth over the last six years (FY200511) was supported by significant traction in CASA market share (from 3.3% in FY2005 to ~6.0% in FY2011). The dominant transaction banking business lies at the core of the banks strength in CASA deposits. Moreover, post the merger of CBoP, the banks branch network moved up at a 30% CAGR during FY200611. We believe HDFC Bank would be in a position to further increase its CASA market share going ahead by increasing CASA mobilisation at the branches, expanding its network at a healthy pace and leveraging its comprehensive product range and strong brand.

Comprehensive product portfolio, sustain traction in fee income

effective

cross-selling

to

Apart from the traditional CEB and forex income, the bank earns substantial fee income from transaction banking, cards and third-party distribution, among others. Overall, the banks core fee income increased at a 27.4% CAGR over FY200811 and stood at around 1.7% of ATA in FY2011, one of the best in the sector offering another significant competitive advantage to the bank.

Improvement in asset quality

The bank has been able to improve its asset quality consistently, as reflected in slippages, which declined from 5.2% in FY2009 to 1.1% during FY2011. Provisions to average assets also declined from 1.2% in FY2009 to 0.8% in FY2011. Even in 1QFY2012 slippages were under control at 0.8-0.9% on an annualised basis.
July 19, 2011

HDFC Bank | 1QFY2012 Result Update

Valuations factor in the positives, in our view

We believe HDFC Bank is among the most competitive banks in the sector, with an A-list management at the helm of affairs, which has one of the best track records in the sector. We believe the bank is well positioned for high qualitative growth, with the CASA and cost-to-income ratio returning to pre-CBoP levels. Over the past 5 years, HDFC Bank has commanded an average premium to Sensex P/E multiple of 32.4%. However considering the recent outperformance of HDFC Banks stock price, the premium has expanded to 41.2%. Given the current valuations (3.4x FY2013E ABV), we believe that the positives are largely factored in the price. Hence, we maintain our Neutral recommendation on the stock.

Exhibit 12: Key assumptions

Particulars (%) Credit growth Deposit growth CASA ratio NIMs Other income growth Growth in staff expenses Growth in other expenses Slippages Treasury gain/(loss) (% of investments)
Source: Angel Research

Earlier estimates FY2012 26.0 27.0 51.3 4.4 27.1 24.3 24.3 1.2 FY2013 27.0 27.0 50.0 4.3 26.1 24.3 24.3 1.2 0.0

Revised estimates FY2012 26.0 26.0 51.7 4.3 23.5 22.1 22.1 1.2 FY2013 27.0 27.0 50.4 4.3 26.9 24.3 24.3 1.2 0.1

Exhibit 13: Change in estimates

Particulars (` cr) NII Non-interest income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Angel Research

Earlier estimates
12,934 5,510 18,444 8,891 9,553 1,946 7,607 2,474 5,133

FY2012 FY2013 Revised Earlier Revised Var. (%) Var. (%) estimates estimates estimates
12,576 5,355 17,931 8,734 9,197 1,575 7,623 2,479 5,144 (2.8) (2.8) (2.8) (1.8) (3.7) (19.1) 0.2 0.2 0.2 15,942 6,951 22,893 11,052 11,841 1,948 9,892 3,217 6,675 15,588 6,795 22,383 10,856 11,527 1,620 9,908 3,222 6,686 (2.2) (2.2) (2.2) (1.8) (2.6) (16.9) 0.2 0.2 0.2

Exhibit 14: Angel EPS forecast vs. consensus

Year (`) FY2012E FY2013E Angel forecast Bloomberg consensus Var. (%)

22.1 28.7

21.6 27.5

2.4 4.6

Source: Bloomberg, Angel Research

July 19, 2011

HDFC Bank | 1QFY2012 Result Update

Exhibit 15: P/ABV band

Price (`) 800 700 600 500 400 300 200 100 0 2.00x 2.75x 3.50x 4.25x 5.00x

Dec-06

Apr-02

Apr-09

Jul-07

Aug-04

Aug-11
Jan-11

Mar-05

Nov-02

May-06

Nov-09

Source: Company, Angel Research

Exhibit 16: P/E band

Price (`) 800 700 600 500 400 300 200 100 0
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11

15x

20x

25x

30x

Source: Company, Angel Research

Exhibit 17: HDFC Bank Premium/Discount to the Sensex (%)

70 60 50 40 30 20 10 0 (10) (20) (30) Premium/Discount to Sensex Avg. Historical Premium

Sep-06

Sep-07

Sep-08

Sep-09

Mar-06

Mar-07

Mar-08

Mar-09

Mar-10

Sep-10

Source: Bloomberg, Angel Research

July 19, 2011

Mar-11

Mar-12

Oct-05

Feb-08

Sep-08

Jun-03

Jun-10

Jan-04

Jan-11

HDFC Bank | 1QFY2012 Result Update

Exhibit 18: Recommendation summary

Company AxisBk FedBk HDFCBk ICICIBk* SIB YesBk AllBk AndhBk BOB BOI CanBk CentBk CorpBk DenaBk IDBI# IndBk IOB J&KBk OBC PNB SBI* SynBk UcoBk UnionBk UtdBk VijBk Reco. Buy Neutral Neutral Buy Accumulate Neutral Accumulate Accumulate Accumulate Buy Neutral Reduce Buy Buy Neutral Accumulate Accumulate Neutral Accumulate Accumulate Accumulate Accumulate Neutral Buy Accumulate Reduce CMP (`) 1,273 461 511 1,061 24 324 208 137 890 411 532 130 523 91 137 231 147 857 347 1,160 2,512 122 90 300 97 71 Tgt. price (`) 1,650 1,355 26 222 145 1,017 498 120 640 107 255 166 392 1,235 2,845 139 357 107 67 Upside (%) 29.7 27.7 8.4 6.7 5.7 14.3 21.3 (8.0) 22.5 17.8 10.2 13.2 12.9 6.4 13.3 13.4 18.8 10.9 (5.7) FY2013E P/ABV (x) 2.0 1.2 3.4 1.9 1.2 2.1 1.0 0.9 1.2 1.1 1.0 0.9 0.8 0.7 0.9 0.9 0.9 0.9 0.8 1.3 1.9 0.8 1.0 1.1 0.8 0.9 FY2013E Tgt P/ABV (x) 2.7 2.5 1.4 1.1 1.0 1.4 1.3 0.8 1.0 0.8 1.0 1.0 0.9 1.4 2.1 0.9 1.3 0.9 0.9 FY2013E P/E (x) 10.5 9.3 17.8 15.3 7.5 10.9 5.8 5.7 6.7 6.1 5.7 5.9 4.9 4.5 6.3 4.9 5.5 5.7 5.2 6.6 9.3 5.1 5.1 6.3 6.5 6.9
#

FY2011-13E EPS CAGR (%) 21.0 20.2 30.5 24.5 11.6 19.2 9.2 3.1 10.5 21.6 1.0 (10.9) 6.1 5.1 14.3 10.4 23.5 8.8 13.7 11.7 44.2 14.6 18.9 21.0 6.1 8.6

FY2013E RoA (%) 1.5 1.3 1.7 1.5 0.9 1.3 0.9 1.0 1.1 0.8 1.0 0.5 0.9 0.8 0.7 1.4 0.7 1.2 1.0 1.1 1.1 0.7 0.6 0.8 0.5 0.5

FY2013E RoE (%) 21.0 14.1 20.9 15.6 17.2 20.6 17.8 16.8 19.5 18.5 18.1 15.1 17.9 15.7 14.5 20.4 16.6 17.0 15.8 21.3 22.6 17.0 17.6 18.1 12.5 12.8

Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), Without adjusting for SASF

July 19, 2011

HDFC Bank | 1QFY2012 Result Update

Income statement
Y/E March (` cr) Net Interest Income - YoY Growth (%) Other Income - YoY Growth (%) Operating Income - YoY Growth (%) Operating Expenses - YoY Growth (%) Pre - Provision Profit - YoY Growth (%) Prov. & Cont. - YoY Growth (%) Profit Before Tax - YoY Growth (%) Prov. for Taxation - as a % of PBT PAT - YoY Growth (%) FY07 45.7 24.4 38.8 43.2 35.3 42.4 30.7 497 30.3 31.1 FY08 40.9 46.0 42.4 54.7 31.7 21.2 39.2 691 30.3 39.3 FY09 7,421 42.0 3,471 57.4 46.5 5,685 51.8 5,207 41.2 1,908 35.6 3,299 44.6 1,054 32.0 2,245 41.2 FY10 8,386 13.0 3,983 14.8 12,370 13.6 5,940 4.5 6,430 23.5 2,141 12.2 4,289 30.0 1,340 31.3 2,949 31.3 FY11 10,543 25.7 4,335 8.8 14,878 20.3 7,153 20.4 7,725 20.2 1,907 (10.9) 5,819 35.7 1,892 32.5 3,926 33.2 FY12E 12,576 19.3 5,355 23.5 17,931 20.5 8,734 22.1 9,197 19.1 1,575 (17.4) 7,623 31.0 2,479 32.5 5,144 31.0 FY13E 15,588 24.0 6,795 26.9 22,383 24.8 10,856 24.3 11,527 25.3 1,620 2.9 9,908 30.0 3,222 32.5 6,686 30.0 3,710 5,228 1,510 2,205

5,220 7,433 10,892 2,421 3,746 2,799 3,688 1,160 1,407 1,639 2,281

1,141 1,590

Balance sheet
Y/E March (` cr) Share Capital Reserves & Surplus Deposits - Growth (%) Borrowings Tier 2 Capital Total Liabilities Cash Balances Bank Balances Investments Advances - Growth (%) Fixed Assets Other Assets Total Assets - Growth (%) FY07 319 6,114 22.4 2,815 3,283 FY08 354 11,143 47.5 4,595 3,449 12,867 12,553 2,225 49,394 63,427 35.1 1,175 4,403 46.0 FY09 425 14,627 41.7 2,686 6,478 16,243 13,527 3,979 58,818 55.9 1,707 6,357 37.6 FY10 458 21,065 17.2 7,012 5,904 20,616 15,483 14,459 58,608 27.3 2,123 5,955 21.4 FY11 465 24,914 24.6 7,447 6,947 28,993 25,101 4,568 70,929 27.1 2,171 14,601 24.7 FY12E 465 28,868 26.0 10,346 8,059 34,321 19,711 8,622 FY13E 465 34,040 27.0 13,012 9,429 43,002 25,033 10,843

68,298 100,769 142,812 167,404 208,586 262,819 333,780

Other Liab. & Prov. 10,407 5,182 3,971 30,565 46,945 33.9 967 3,605 24.1

91,236 133,177 183,271 222,459 277,353 344,879 433,727

94,193 115,819 26.0 2,618 18,156 24.3 27.0 3,194 22,833 25.8

98,883 125,831 159,983 201,578 256,004

91,236 133,177 183,271 222,459 277,353 344,879 433,727

July 19, 2011

10

HDFC Bank | 1QFY2012 Result Update

Ratio analysis
Y/E March Profitability ratios (%) NIMs Cost to Income Ratio RoA RoE B/S ratios (%) CASA Ratio Credit/Deposit Ratio CAR - Tier I Asset Quality (%) Gross NPAs Net NPAs Slippages Loan Loss Prov. /Avg. Assets Provision Coverage Per Share Data (`) EPS ABVPS (75% cover.) DPS Valuation Ratios PER (x) P/ABVPS (x) Dividend Yield DuPont Analysis NII (-) Prov. Exp. Adj. NII Treasury Int. Sens. Inc. Other Inc. Op. Inc. Opex PBT Taxes RoA Leverage RoE 4.5 1.4 3.1 (0.1) 3.0 1.9 4.9 2.9 2.0 0.6 1.4 14.0 19.5 4.7 1.3 3.4 0.1 3.6 1.8 5.4 3.3 2.0 0.6 1.4 12.5 17.7 4.7 1.2 3.5 0.3 3.7 1.9 5.7 3.6 2.1 0.7 1.4 11.9 16.9 4.1 1.1 3.1 0.2 3.3 1.8 5.0 2.9 2.1 0.7 1.5 11.1 16.1 4.2 0.8 3.5 (0.0) 3.4 1.8 5.2 2.9 2.3 0.8 1.6 10.7 16.7 4.0 0.5 3.5 (0.0) 3.5 1.7 5.3 2.8 2.5 0.8 1.7 11.4 18.8 4.0 0.4 3.6 0.0 3.6 1.7 5.3 2.8 2.5 0.8 1.7 12.2 20.9 71.5 12.8 0.3 56.9 7.9 0.3 48.4 7.3 0.3 39.6 5.4 0.5 30.3 4.7 0.6 23.1 4.1 0.9 17.8 3.4 1.1 7.1 40.0 1.4 9.0 64.5 1.7 10.6 70.2 1.7 12.9 2.4 16.9 3.3 22.1 4.4 28.7 5.6 94.0 109.1 126.1 148.3 1.4 0.4 2.2 0.8 69.2 1.4 0.5 2.5 0.9 67.1 2.0 0.6 5.3 1.0 68.4 1.4 0.3 2.6 1.0 78.4 1.0 0.2 1.1 0.3 82.5 1.0 0.2 1.2 0.4 76.0 0.9 0.2 1.2 0.4 76.7 57.7 68.7 13.1 8.6 54.5 62.9 13.6 10.3 44.4 69.2 13.8 9.3 52.0 75.2 15.7 12.0 52.7 76.7 14.6 11.0 51.7 76.7 13.0 9.9 50.4 76.7 12.3 9.3 4.7 46.4 1.4 19.5 4.9 50.4 1.4 17.7 4.9 52.2 1.4 16.9 4.3 48.0 1.5 16.1 4.4 48.1 1.6 16.7 4.3 48.7 1.7 18.8 4.3 48.5 1.7 20.9 FY07 FY08 FY09 FY10 FY11 FY12E FY13E

July 19, 2011

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HDFC Bank | 1QFY2012 Result Update

Research Team Tel: 022 - 39357800

E-mail: [email protected]

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

HDFC Bank No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

July 19, 2011

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