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Indian bank HDFC Bank disappoints on margins and fee income growth – analysts

BENGALURU, Jan 17 (Reuters) – Shares of India’s leading private sector lender HDFC Bank (HDBK.NS) fell on Monday, even as it reported third-quarter profit in line and improved asset quality, while analysts reported its non-improvement. lower margins and fees from its payments business.

HDFC Bank, India’s first lender to post its December quarter results, posted record profit and record card issuance over the weekend after the central bank lifted restrictions on the bank issuing new credit cards Last year.

However, a drop in payment fees and credit card fees from a year ago – with the bank granting fee waivers as an incentive – was a new issue for the lender, Shivaji Thapliyal said, analyst at YES Securities.

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Net interest margin, a key measure of banks’ profitability, was unchanged at 4.1% from the previous quarter, as growth in its retail loan portfolio – at 13.3% year-on-year – was lower than overall loan growth of 16.5%.

“Retail credit growth remains suboptimal, with its share at 47%, compared to 53% to 54% two years ago, weighing in part on margins,” said Anand Dama, analyst at Emkay Global, in a note, adding that slow car sales were having an impact. vehicle financing.

Growth in advances was driven by commercial and rural bank loans, which increased by 29.4%.

As analysts expect a recent surge in COVID-19 cases and related restrictions to impact lending in the last quarter, HDFC Bank said it was confident of weathering the third wave. .

Lower provisions for bad debts pushed net profit for the three months to December 31 up 18.1% to 103.42 billion rupees ($1.39 billion), beating analysts’ estimates for a profit of Rs 100.89 billion, according to Refinitiv data.

The 1.4% drop in its shares on Monday undermined the 4.4% gains recorded so far this year. The stock rose 3% in 2021, underperforming a 13.5% rise in the Nifty Bank Index (.NSEBANK).

($1 = 74.2770 Indian rupees)

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Reporting by Chris Thomas in Bengaluru; edited by Uttaresh.V

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