15 July 2015
Annual Report Update | Sector: Financials
HDFC Bank
BSE Sensex
28,198
S&P CNX
8,524
CMP: INR1,097
TP: INR1,350 (+23%)
Buy
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Annual Report Analysis: Franchise keeps getting better
“Touch the future today”— Digitalization a key theme
HDFC Bank’s annual report analysis suggests strong performance across parameters
even during periods of significant economic challenges. Digitization initiatives at the
bank are gaining significant traction, with ~88% of the overall transactions through
alternate channels. HDFC has 40%+ market share (MS) in value terms on the mobile
banking platform. Retail story continues to play out with 79% retail deposits, 47%+
retail loans, and concentration ratios that are significantly better than peers. Lastly,
subsidiaries are playing a major part with 75% growth in PAT. HDB Financial services
(NBFC arm) now has a loan book of INR197b (68% CAGR FY12-15) and reported a PAT
of INR3.5b (+67% YoY). The company’s ROA is ~2% and ROE ~15%. HDFCB is best
placed in the current environment, with ~44% CASA ratio, growth outlook of at least
1.3x industry and lowest asset quality risk. Despite the recent capital raising, RoE is
expected to be ~20%. Comfort on earnings (RoA at ~2%) remains high. Maintain Buy
with a target price of INR1,350 (4x FY17E BV).
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap.(INR b)/(USDb)
HDFCB IN
2,506.5
1,105/792
2/11/21
2,750/43.3
Digitalization initiatives gaining traction; transactions via alternate
channels increasing
Avg Val(INRm)/Vol‘000 1,886/1961
Free float (%)
78.4
Financial Snapshot (INR Billion)
Y/E Mar
2016E 2017E 2018E
NII
270.8 333.6 416.2
OP
207.2 255.9 319.9
NP
122.7 147.9 180.6
NIM (%)
4.5
4.5
4.6
EPS (INR)
49.0 59.0 72.1
EPS Gr. (%)
20.2 20.5 22.1
BV/Sh. (INR)
284 330 385
ABV/Sh. (INR) 282 326 382
RoE (%)
18.4 19.2 20.1
RoA (%)
1.9
1.9
1.8
Payout (%)
23.4 23.4 23.4
Valuations
P/E(X)
22.4 18.6 15.2
P/BV (X)
3.8
3.3
2.8
P/ABV (X)
3.9
3.4
2.9
Div. Yield (%) 0.9
1.1
1.3
Internet and mobile banking accounts for 2/3
rd
of the overall traction at the
bank. Share of branches in overall transactions has declined to just 12%.
HDFCB offers 160 transaction options on the Internet banking channel and
75 on the mobile banking platform.
Analytics central to many businesses:
Analysts use internal and external
data, big data and social media to analyze customer behavior and customize
a product accordingly. Existing customers beyond with a certain credit score
are offered instant credit cards, 10-second offers for personal, consumer
durable and auto loans. Customized LAS (loan against security) options are
also given to customers.
HDFCB has a 40% market share in India in terms of value on the mobile
banking platform in India. The bank’s website sees 13m visitors monthly.
Strong PAT growth (+75% YoY) in subsidiaries continues
HDB financial services (NBFC arm) now has a loan book of INR197b (44%
YoY and 68% CAGR FY12-15) and reported a PAT of INR3.5b (+67% YoY). The
company’ ROA stand at ~2% and ROE at ~15%. During the year, the
company raised INR12b via rights issue of 9:25. HDFCB has a 97.2% stake in
the company. The company now has 425 branches (added 150 branches in
FY15) and increased presence in 63 locations to 265. Employee strength has
increased to 10,476 employees (+38% YoY).
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com); +91 22 3982 5415
Vallabh Kulkarni
(Vallabh.Kulkarni@MotilalOswal.com); +91 22 3982 5430
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.

HDFC Bank
Shareholding pattern (%)
Mar-15 Dec-14 Mar-14
Promoter
15.1
15.1
15.2
DII
9.0
9.0
7.5
FII
51.9
52.8
55.6
Others
24.0
23.1
21.7
FII includes depository receipts
Stock Performance (1-year)
HDFC Bank
Sensex - Rebased
1,200
1,075
950
825
700
Product portfolio of HDB financial services: a) Unsecured loans (max 48month
tenor, ticket size INR0.1m-0.3m), b) secured loans (max 120month tenor,
ticket size INR0.1m-0.8m)—LAP, gold loans, car (CE and CV; both old and
new), LAS. The Company also runs BPO services (capacity 2600 people) and
provides end-to-end collection services for HDFCB through 400 locations.
GNPA and NNPA of the company stand at 84bp and 48bp, respectively.
HDFC Securities’ top-line increased 58% YoY to INR4.2b (broking income up
65% YoY to INR3.37b), PBT margins improved to 60% (46% a year ago) and
PAT margins improved to 40% (30% a year ago). The company reported PAT
of INR1.65b (2.1x YoY) and ROE of 33% (19% a year ago). Number of branches
increased to 250 from 200 a year ago and location presence increased from
160 to 186. HDFCB has increased its stake to 97.9% from 89.2% a year ago.
Most granular balance sheet amongst the Indian lenders
Share of retail deposits as a percentage of overall deposits increased to 79.2%
v/s 78.2% a year ago and from a low of 67.1% in FY11.
Contribution of top 20 depositors in overall deposits declined to 6.2% v/s
7.7% in FY14 and 8.8% in FY11. The number stands at 6.4% for ICICIBC and
12.6% for AXSB.
After three years of decline, average savings balance per branch increased to
INR337m (despite aggressive branch expansion) from INR319m in FY14.
Average balance per customer is one of the best in the industry at INR550k
(2x of the industry average).
Share of top 20 exposure and loans has declined marginally to 13.1% (13.4%
in FY14) and 15% (15.2% in FY14)
The top 4 NPA accounts contribute just 10% of NPA (41% for ICICIBC and 23%
for AXSB).
Share of bulk corporate deposits in the overall deposits remains one of the
lowest at 4.5% (5.1% a year ago and a high of 11% in FY11)
Significant comfort on asset quality
Overall stress loans on the balance sheet stands at 35bp, which are more
than adequately provided by floating provisions. Provisions coverage
including floating and general provisions stands at 165%. Floating provisions
accounted for INR15.2b (2.5% of BV and INR6.1/share).
Large corporate exposure sold during the year stands at INR5.66b, for which
floating provisions utilized is INR3.1b and consideration (SRs+cash) received is
INR2.6b. Outstanding security receipts on the balance sheet stands at
INR2.3b.
Share of NPAs from services segment increased to 37% from 30% a year ago.
The segment contributes ~32% of overall loans for the bank. Exposures to
real estate developers stood at 0.3% of the loan book v/s 0.4% a year ago.
HDFCB’s exposure to key stressed sectors is less than 3% of the overall
funded exposures. Gross credit exposure grew 20% YoY (in line with balance
sheet growth), led by 24% YoY growth in funded exposure. Non-funded
exposure was flat YoY. Among the segments having more than 4% exposure
in overall credit exposure, a) agri and allied (10% of exposure) grew 55% YoY,
b) autos (5%) grew 41% YoY, c) BFSI (7%) grew 13% YoY, d) consumer loans
2
15 July 2015

HDFC Bank
(25%) grew 25% YoY, e) retail trade (4.5%) grew 32% YoY, f) wholesale trade
(7.2%) declined 34%YoY and g) services (5.3%) declined 12% YoY.
Our view on the stock
HDFCB is best placed in the current environment, with ~44% CASA ratio,
growth outlook of at least 1.3x industry and lowest asset quality risk.
With CET1 of ~13.5%, strong capacity building during the moderate growth
cycle (branches at 4,014 v/s 1,412 in FY09) and significant digitalization
initiatives, the bank is well placed to benefit from the expected pick-up in the
economic growth cycle.
Despite the recent capital raising, RoE is expected to be ~20%. Comfort on
earnings (RoA at ~2%) remains high. Maintain
Buy
with a target price of
INR1,350 (4x FY17E BV).
Exhibit 1: 1-year forward P/BV
5.5
4.5
3.5
2.5
1.5
3.4
1.9
PB (x)
Peak(x)
Avg(x)
Min(x)
5.0
3.6
Exhibit 2: 1-year forward P/E
42
34
26
18
10
13.9
21.2
20.7
PE (x)
Peak(x)
Avg(x)
Min(x)
35.1
Source: MOSL, Company
Source: MOSL, Company
Exhibit 3: HDFCB stock performance vs. Bankex
250
225
200
175
150
125
100
75
AXSB
YES
IIB
HDFCB
Bankex
ICICIBC
Source: Bloomberg, MOSL
15 July 2015
3

HDFC Bank
Other highlights
HDB financial services’ Board of Directors approved the merger of M/s. HBL
Global Private Limited and M/s. Atlas Documentary Facilitators Private Limited
(HDFCB has direct stake of 29%) with the company. The company is awaiting the
requisite regulatory approval from RBI (from HDB financial services annual
report).
Dilutions on account of ESOPs exercised stood at 90bp v/s 80bp a year ago and
the last 10-year average of 65bp. ESOPs granted during the year stood at 1.65%
of the outstanding equity base. ESOPs outstanding as a percentage of equity
base stands at 4.4%.
HDFCB has achieved overall PSL target of 40%.
Third-party fees as a percentage of overall fees increased to 15% v/s 11% a year
ago (+57% YoY), led by strong growth in MF distribution income. Life insurance
(34% YoY) and general insurance (17% YoY) also reported strong growth.
Income earned from sale of home loans stood at INR1.45b (INR1.3b a year ago)
and amount paid to HDFC Ltd for servicing the loan stood at INR1.4b (INR0.9b a
year ago).
Sharp rise in commercial papers (CP) investments led to a jump in Investments
growth (38% YoY); adjusted for CP, investments are up 27% YoY. Investments in
RIDF and deposits with NABARD were flat YoY; their share in overall interest
earning assets declined to 2.2% from 2.8% a year ago.
AFS as a percentage of overall portfolio increased to 40% from 28% a year ago,
led by a sharp jump in CP investments. Of the SLR, investments in AFS portfolio
stand at 32% v/s 26% a year ago. Profit on sale of HTM portfolio of INR2.25b
(INR0.6b in FY14).
Guarantees and acceptance (off balance sheet) business increased 26% YoY; as a
percentage of loans, this business remains flat YoY at ~15%.
Commission paid to agents as a percentage of opex increased to 9.3% from 8.3%
a year ago; it grew 30% YoY (inline with healthy disbursement growth)
During the year, the company bought back INR82.5b (of which PSL loans were
INR41.7b) worth of loans from HDFC and sourced an average INR11b worth of
loans per month for HDFC Ltd.
ALM profile largely stable YoY.
LCR ratio for 4QFY15 stood at 100.8%—significantly higher than RBI requirement
of 60%.
Sustainable Livelihood initiatives have so far covered 3.92m households from
the bottom of the pyramid in 12,650 villages, disbursing loans worth INR68.84b
in 25 Indian states.
15 July 2015
4

HDFC Bank
DIGITAL BANKING - A KEY THEME
Exhibit 4: Internet and Mobile now contribute 2/3rd of
transactions…
Branches
Phone Banking and Others
3
14
40
43
2001
ATM
Internet and Mobile
Exhibit 5: ... leading to cost efficiency as digital transactions
th
cost ~1/10 of branch based transactions
C/I ratio (%)
3.8
3.2
3.1
3.0
3.0
2.7
2.6
Opex to assets (%)
16
10
51
23
2006
29
12
40
19
2009
55
5
25
15
2014
63
4
21
12
2015
60
2009
55
2010
54
2011
54
2012
54
2013
50
2014
48
2015
Source: MOSL, Company
Source: MOSL, Company
Exhibit 6: Employee/branch coming down; Cost/Employee
CAGR of 5% over FY09-15
Employee/Branch
0.5
0.4
0.5
0.6
Cost/Empl (INR m)
0.6
0.6
0.7
Exhibit 7: Sharp improvement in mobile banking market
share (%)
AXSB
38
34
33
ICICIBC
34
26
20
8
10
5
1
FY11
2
FY12
7
FY13
13
FY14
12
FY15
17
HDFCB
34
37
2009
30
2010
28
2011
26
2012
23
2013
20
2014
19
2015
0
FY10
Source: MOSL, Company
Source: MOSL, Company
Exhibit 8: Flagship Products – Chillr, Payzapp and Watch banking
Source: Company, MOSL
15 July 2015
5

HDFC Bank
FRANCHISE – KEEPS GETTING BETTER
Exhibit 9: A third of the branches are less than 3 years old
No of branches
Exhibit 10: ATM expansion moderated over last 3 years
No of ATMs
Source: MOSL, Company
Source: MOSL, Company
Exhibit 11: Presence in almost every major town in India (no. Exhibit 12: Faster penetration into hinterland (% branches
of cities)
outside top 9 cities)
79
81
80
62
54
58
64
68
70
75
Source: MOSL, Company
Source: MOSL, Company
Exhibit 13: The customer base increased sharply (~3m) led by Exhibit 14: Increased customer base has led to higher card
network expansion(m)
base, cautious approach towards credit card growth (m)
Debit cards
Credit cards
Source: MOSL, Company
Source: MOSL, Company
Exhibit 15: POS business back to FY13 levels
POS ('000)
28
21
28
20
22
POS (MS %)
Exhibit 16: POS market share continues to improve (%)
HDFCB
31
28
24
25
23
8
FY13
28
AXSB
ICICIBC
SBIN
28
23
20
13
FY14
22
18
22
20
122
184
243
216
245
0
FY12
FY15
Source: MOSL, Company
6
Source: MOSL, Company
15 July 2015

HDFC Bank
BASEL III AND ALM PROFILE
Exhibit 17: Focus on granular and secured loans has resulted
in low risk density
RWA to total assets (%)
45.9
45.0
25.1
24.7 26.5
12.9
40
41
42
41
43
41
22.4
Gr. of RWA (%)
Exhibit 18: More than 70% of the assets are low risk weight
which remains largely stable (% of RWA)
less than 100%
25
25
34
Equal to 100%
26
32
28
32
More than 100%
23
34
23
36
23.0
20.4 19.8
35
Source: MOSL, Company
Source: MOSL, Company
Exhibit 19: None of the stress sectors are in the top funded
exposures of HDFCB (Funded)
35
13.9
Sector exposure as % of total
55
41 32
34
13
12
9.6
7.2
6.7
5.3
4.9
4.4
YoY gr. (%)
24
-39
3.0
Exhibit 20: Except Coal/Petroleum, well diversified non-
funded exposure (Non-funded)
Sector exposure as % of total
76
YoY gr. (%)
2
28
-26
-3
-1
24
27
19
18
-2
1.9
2.9
Source: MOSL, Company
Source: MOSL, Company
Exhibit 21: Well balanced ALM profile (FY14 ALM)
Deposits
Borrowings
Advances
Investments
Exhibit 22: Investment book shifted towards lower
maturities; well placed to benefit from decline in interest
rates (FY15 ALM)
Deposits
Borrowings
Advances
Investments
Source: MOSL, Company
Source: MOSL, Company
15 July 2015
7

HDFC Bank
LOANS, DEPOSITS AND INVESTMENTS
Exhibit 23: Loan mix shifted towards corporate segment in
FY15 (%)
Retail loans
38
Corporate loans
Gold loans,
2.3
Home
loans, 14.0
Business
Bkg, 10.9
Credit
Cards, 9.3
Source: MOSL, Company
Com.
Vehle &
const
equip, 11.8
Exhibit 24: Focus remains on granular retail loans; CV/CE
remained a drag on growth (Retail mix %)
Kissan gold Others,
5.1
cards, 9.4
Auto Loans,
23.4
Personal
Loans, 14.9
Loan
against
securities,
0.8
Two
wheeler,
2.4
Source: MOSL, Company
50
50
45
43
51
53
62
50
50
55
57
49
47
Exhibit 25: Share of retail deposits continued to increase
demonstrating power of strong liability franchise (Deposits
mix %)
11
45
20
24
Saving Dep.
Retail term dep.
10
11
38
22
30
37
22
30
9
42
18
30
Current Dep.
Corp. term dep.
5
7
45
18
30
50
17
28
5
51
16
28
Exhibit 26: The concentration matrices show improvement
across categories (Concentration in top 20 accounts)
% of total deposits
% of total exposure
% of total loans
% of total NPA
Source: MOSL, Company * top 4 accounts for NPA
Source: MOSL, Company
Exhibit 27: Investment book largely dominated by G-sec;
exposure to debentures and shares remains low (%)
Others,
21%
Exhibit 28: Investment book well placed for a declining rate
cycle – AFS now constitutes ~40% of investments
HTM
32
29
41
38
AFS
38
AFS %
28
40
Subsidaries,
2%
Debs &
Bonds, 1%
Shares, 0%
Govt. Secs,
72%
SLR Non SLR Non SLR SLR SLR Non SLR Non SLR Non SLR Non
SLR
SLR
SLR
SLR
SLR
SLR
FY09
FY10
FY11
FY12
FY13
FY14
FY15
Source: MOSL, Company
Source: MOSL, Company
15 July 2015
8

HDFC Bank
ASSET QUALITY
Exhibit 29: Strong control over asset quality (%)
Slippage Ratio
2.9
5.4
2.6
2.3 2.4
2.2 2.2
2.0
2.1
1.6
1.5
Credit Cost
22
2
1
17
58
Exhibit 30: Higher slippages over last three years has resulted
in higher proportion of Substandard and D1 assets
Sub Std
28
2
5
21
44
D1
23
2
9
18
48
D2
D3
21
4
14
21
40
Loss Assets
19
5
24
17
65
21
14
16
24
76
1.2
0.9
0.8
1.6
1.2 1.0
0.8
0.6 0.6 0.6 0.5
1.6
1.9
Source: MOSL, Company
Source: MOSL, Company
Exhibit 31: Asset quality improvement across segments
Agri and alllied activities
Services
3.9
Industry (MSME & large)
Personal loans
Exhibit 32: GNPA % at multi-year low
GNPA
NNPA
PCR
1.5
1.1
0.9
1.7
1.3
1.6
0.9 0.9
0.6
0.5
1.6
1.3
1.0
1.0
0.9
1.0 0.6 1.0
0.6
0.9
0.5
0.6
0.5
2.2
1.4
1.0 1.0 1.0 1.0 0.9
2.0
0.4 0.2 0.2 0.4 0.4 0.5 0.6 0.3 0.2 0.2 0.2 0.3 0.2
1.9 1.7
1.4 1.4 1.4
Source: MOSL, Company
Source: MOSL, Company
Exhibit 33: Floating provisions at ~0.3% of assets
Floating Provisions
0.47
0.29
0.50
0.41
0.28
% of Assets
Exhibit 34: Consistent improvement in risk adjusted margins
(%)
Risk adj NIM
3.1
2.4
1.9 2.0 1.8
2.4
3.6
3.8 3.9 3.8 3.9
2.2
2.6
7,350
14,350
18,350
18,350
15,232
Source: MOSL, Company
Source: MOSL, Company
15 July 2015
9

HDFC Bank
PROFITABILITY
Exhibit 35: Core NIM (on average assets) largely stable in
FY15 - remains best among the peers
NIMs
4.3
4.0
4.0
4.4
4.2
4.4
4.4
4.5
4.4
32
22
20
20
20
12
1.5
1.6
1.5
1.4
1.4
1.4
1.3
15
1.2
Exhibit 36: Uptick in fee income growth in FY15
Fee inc. to avg. Assets (%)
Fee inc. gr. (%)
43
4.4
Source: MOSL, Company
Source: MOSL, Company
Exhibit 37: Cost to core income declining as more number of
recently added branches are breaking even
Cost to avg. assets
Cost to core inc.
Exhibit 38: Strong trading gains helps profitability in FY15
Trading gains (INRb)
10.6
11.6
8.0
3.0
0.4
1.7
1.6
5.8
0.9
1.1
3.8
% of PBT
2.4
-4.2
-0.7
3.8
3.5
2.1 2.7 2.9 3.4 3.6 3.8 3.8 3.2 3.1 3.0 3.0 2.7 2.6
-0.9 -2.0
-0.5
-2.6
FY06 FY07 FY08 FY09 FY09 FY11 FY12 FY13 FY14 FY15
Source: MOSL, Company
Source: MOSL, Company
Exhibit 39: Strong Core operating performance and low
delinquencies lead to high RoA
RoA
19.5
17.7
17.7
16.9
16.1 16.7
RoE
20.3
18.7
21.3
19.4
18.4
19.2
20.1
Exhibit 40: Consistent improvement in return on risk
weighted assets (%)
2.4
2.5
2.6
2.7
1.8 1.9 1.9 1.9 1.9 1.8
1.6 1.7
1.4 1.4 1.4 1.4 1.5
1.7
1.7
1.8
1.9
2.1
2.3
Source: MOSL, Company
Source: MOSL, Company
15 July 2015
10

HDFC Bank
SIGNIFICANT IMPROVEMENT IN MARKET SHARE ACROSS PARAMETERS
Exhibit 41: Loans grew at CAGR of 30% over FY06-15
Market Share in Loans (%)
4.5
3.6
3.7
3.9
4.1
3.0
2.6
2.5
3.5
3.5
3.7
3.8
4.9
Exhibit 42: Strong market share gain in deposits
Market Share in deposits (%)
4.0
4.8
4.3
3.3
2.3
2.4
2.6
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Source: Company, MOSL
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Source: Company, MOSL
Exhibit 43: Focus on building granular liability profile
CA mkt share (%)
SA mkt share (%)
7.5
4.8
8.1
8.9
Exhibit 44: Profit share tripled at the expense of PSU Banks
(PAT MS %)
12.4
10.5
7.4
5.7
6.2
6.3
6.0
3.6
6.7
4.1
6.9
4.3
7.0
4.6
4.9
5.2
3.5
3.7
3.7
4.3
5.2
5.6
6.3
2.8
2.9
3.2
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Source: Company, MOSL
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Source: Company, MOSL
Exhibit 45: Branch additions at 3x industry average (Branch
MS %)
3.2
2.4
1.6
0.7
0.9
0.9
1.9
2.0
2.7
2.8
Exhibit 46: Strong ATM presence across the country (ATM MS
%)
9.3
7.7
7.0
7.3
9.4
7.0
6.7
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Source: Company, MOSL
FY09
FY10
FY11
FY12
FY13
FY14
FY15
Source: Company, MOSL
15 July 2015
11

HDFC Bank
Exhibit 47: DuPont Analysis: Operating leverage to lift RoEs (%)
Y/E March
Interest Income
Interest Expended
Net Interest Income
Core Fee Income
Fee to core Income
Core Income
Operating Expenses
Cost to Core Income
Employee cost
Others
Core operating Profits
Trading and others
Operating Profits
Provisions
NPA
Others
PBT
Tax
Tax Rate
RoA
Leverage (x)
RoE
FY08
9.4
4.4
5.0
1.6
23.8
6.6
3.8
58.2
1.2
2.7
2.8
0.7
3.4
1.4
1.1
0.2
2.0
0.6
30.3
1.4
12.5
17.7
FY09
10.5
5.6
4.8
1.5
23.1
6.3
3.8
59.6
1.4
2.3
2.5
0.9
3.4
1.3
1.2
0.1
2.1
0.7
32.0
1.4
11.9
16.9
FY10
8.1
3.8
4.3
1.5
25.9
5.8
3.2
55.3
1.1
2.1
2.6
0.8
3.3
1.2
1.1
0.1
2.1
0.7
31.3
1.5
11.1
16.1
FY11
8.2
3.8
4.4
1.4
24.0
5.8
3.1
53.8
1.1
2.0
2.7
0.6
3.3
0.9
0.5
0.5
2.3
0.8
32.5
1.6
10.7
16.7
FY12
9.1
4.9
4.2
1.4
24.6
5.6
3.0
54.3
1.1
1.9
2.5
0.5
3.1
0.6
0.4
0.3
2.4
0.8
31.2
1.7
11.1
18.7
FY13
9.5
5.2
4.3
1.3
23.9
5.6
3.0
54.1
1.1
2.0
2.6
0.5
3.1
0.5
0.3
0.1
2.6
0.8
31.0
1.8
11.2
20.3
FY14
9.2
5.1
4.1
1.3
23.8
5.4
2.7
49.6
0.9
1.8
2.7
0.5
3.2
0.4
0.4
0.0
2.9
1.0
33.6
1.9
11.2
21.3
FY15
9.0
4.8
4.1
1.2
22.9
5.4
2.6
48.1
0.9
1.7
2.8
0.4
3.2
0.4
0.3
0.1
2.8
0.9
33.4
1.9
10.3
19.4
FY16E
8.9
4.8
4.1
1.2
22.1
5.3
2.5
47.5
0.9
1.7
2.8
0.4
3.2
0.4
0.3
0.0
2.8
0.9
33.0
1.9
9.8
18.4
FY17E
8.8
4.6
4.2
1.1
21.3
5.3
2.5
46.2
0.8
1.6
2.9
0.3
3.2
0.4
0.4
0.1
2.8
0.9
33.0
1.9
10.3
19.2
FY18E
8.8
4.6
4.3
1.1
20.4
5.3
2.4
44.7
0.8
1.6
3.0
0.3
3.3
0.5
0.5
0.1
2.8
0.9
33.0
1.8
10.9
20.1
Source: MOSL, Company
Elongated capital raising cycle over the years - Sustaining high internal capital generation rates remains a key
Exhibit 49: Diminishing impact of capital raising on return
ratios
ROE before cap raising
2.2
1.7
1.7
0.8
21
18
19
18
17
16
21
20
ROE after capital raising
Exhibit 48: Elongated capital raising cycle over the years
Capital raised as a % Mcap
9.4
10.1
6.0
4.3
2005
2007
2009
2015
Source: MOSL, Company
2005
2007
2009
2015
Source: MOSL, Company
15 July 2015
12

HDFC Bank
SUBSIDIARIES
Exhibit 50: Subsidiaries contribution to consolidated PAT
increasing
Subs PAT % HDFCB SA PAT
4.8
3.3
2.0
2.5
36
12
FY12
20
FY13
FY14
FY15
Source: MOSL, Company
Exhibit 51: Consolidated ROEs surpassing standalone ROEs
Standalone%
Consolidated %
Difference (bp)
55
FY12
FY13
FY14
FY15
Source: MOSL, Company
Exhibit 52: HDB Financial Services – Summary Financials
INR m
Capital
Networth
Debt/Equity (x)
Leverage (x)
Total Assets
AUM (as per AR)
Total Income
PBT
PBT Margin (%)
Tax
Tax Rate (%)
PAT
PAT Margin (%)
ROA (%)
ROE (%)
CAR (%)
Tier I (%)
Tier II (%)
Employees
Branches
Cities
GNPA (%)
NNPA (%)
FY2012
4,106
7,708
4.1
5.3
40,646
39,920
4,311
707
16.4
196
28
511
12
1.9
6.9
19.9
18.9
1.0
4,334
180
135
0.10
0.05
FY2013
4,108
8,735
8.2
9.6
84,123
82,510
9,632
1,501
15.6
477
32
1,025
11
1.6
12.5
18.3
10.1
8.2
6,404
230
184
0.44
0.25
FY2014
5,138
16,285
6.8
8.4
136,894
135,600
16,883
3,181
18.8
1,088
34
2,092
12
1.9
16.7
18.4
11.4
7.0
7,614
275
202
FY2015
6,995
31,251
4.9
6.3
197,421
192,900
25,273
5,303
21.0
1,808
34
3,495
14
2.1
14.7
23.0
15.5
7.5
10,476
425
265
AUM CAGR of 80%+ over
FY12-15
Asset quality remains
healthy
0.81
0.84
0.42
0.48
Source: MOSL, Company
15 July 2015
13

HDFC Bank
Exhibit 53: HDFC Securities – Summary Financials
INR m
Capital
Reserves and Surplus
Networth
Total Assets
Total Income
PBT
PBT Margin (%)
Tax
Tax Rate (%)
PAT
PAT Margin
(%)
Debt/Equity (x)
ROA (%)
ROE (%)
Branches
Cities
FY2012
151
2,880
3,031
4,605
2,100
801
38.1
260
32
541
26
0.5
11.7
17.8
184
-
FY2013
154
3,559
3,713
5,441
2,321
974
42.0
306
31
668
29
0.5
13.3
19.8
194
150
FY2014
155
4,267
4,422
8,588
2,631
1,212
46.1
427
35
784
30
0.9
11.2
19.3
FY2015
155
5,545
5,700
9,470
4,170
2,507
60.1
858
34
1,650
40
0.7
18.3
32.6
Sharp improvement in
profitability ratios for HDFC
Securities
200
250
160
186
Source: MOSL, Company
15 July 2015
14

HDFC Bank
Financials and valuations
Income Statement
Y/E March
Interest Income
Interest Expense
Net Interest Income
Change (%)
Non Interest Income
Net Income
Change (%)
Operating Expenses
Pre Provision Profits
Change (%)
Provisions (excl tax)
PBT
Tax
Tax Rate (%)
PAT
Change (%)
Equity Dividend (Incl tax)
Core PPP*
Change (%)
2012
278,742
149,896
128,846
17.2
57,836
186,682
17.1
92,776
93,906
15.1
18,774
75,132
23,461
31.2
51,671
31.6
11,749
79,428
16.5
2012
4,693
294,553
299,247
2,467,064
18.3
1,194,059
8.6
238,465
374,319
3,379,095
209,377
974,829
37.4
1,954,200
22.2
23,472
217,216
3,379,095
2012
19,994
3,523
1.0
0.2
82.4
2013
350,649
192,538
158,111
22.7
68,526
226,637
21.4
112,361
114,276
21.7
16,770
97,506
30,249
31.0
67,257
30.2
15,360
97,607
22.9
2013
4,759
357,383
362,141
2,962,470
20.1
1,405,215
17.7
330,066
348,642
4,003,319
272,802
1,116,136
14.5
2,397,206
22.7
27,031
190,144
4,003,319
2013
23,346
4,690
1.0
0.2
79.9
2014
411,355
226,529
184,826
16.9
79,196
264,023
16.5
120,422
143,601
25.7
15,880
127,721
42,937
33.6
84,784
26.1
19,275
122,227
25.2
2014
4,798
429,988
434,786
3,673,375
24.0
1,646,214
17.2
394,390
413,444
4,915,995
395,836
1,209,511
8.4
3,030,003
26.4
29,399
251,246
4,915,995
2014
29,893
8,200
1.0
0.3
72.6
2015
484,699
260,742
223,957
21.2
89,964
313,920
18.9
139,875
174,045
21.2
20,758
153,287
51,128
33.4
102,159
20.5
24,142
150,674
23.3
2015
5,013
615,081
620,094
4,507,956
22.7
1,984,921
20.6
452,136
324,845
5,905,031
363,315
1,664,599
37.6
3,654,950
20.6
31,217
190,949
5,905,031
2015
34,384
8,963
0.9
0.2
73.9
2016E
581,036
310,274
270,762
20.9
101,519
372,281
18.6
165,053
207,228
19.1
24,023
183,205
60,458
33.0
122,747
20.2
28,600
182,427
21.1
2016E
5,013
709,228
714,241
5,499,707
22.0
2,421,603
22.0
524,290
405,668
7,143,906
433,685
1,914,289
15.0
4,532,138
24.0
34,654
229,139
7,143,906
2016E
43,263
10,327
0.9
0.2
76.1
2017E
696,781
363,207
333,574
23.2
118,172
451,746
21.3
195,884
255,862
23.5
35,124
220,738
72,844
33.0
147,894
20.5
34,459
228,038
25.0
2017E
5,013
822,663
827,676
6,819,636
24.0
3,027,004
25.0
613,534
506,844
8,767,691
513,226
2,297,147
20.0
5,665,173
25.0
40,091
252,053
8,767,691
2017E
61,840
13,313
1.1
0.2
78.5
(INR Million)
2018E
863,708
447,537
416,172
24.8
137,543
553,715
22.6
233,834
319,881
25.0
50,278
269,603
88,969
33.0
180,634
22.1
42,088
288,768
26.6
Balance Sheet
Y/E March
Equity Share Capital
Reserves & Surplus
Net Worth
Deposits
Change (%)
of which CASA Dep
Change (%)
Borrowings
Other Liabilities & Prov.
Total Liabilities
Current Assets
Investments
Change (%)
Loans
Change (%)
Fixed Assets
Other Assets
Total Assets
(INR Million)
2018E
5,013
961,209
966,222
8,456,349
24.0
3,783,755
25.0
724,051
633,314
10,779,937
619,107
2,756,577
20.0
7,081,466
25.0
45,528
277,258
10,779,937
Asset Quality
Y/E March
GNPA (INR m)
NNPA (INR m)
GNPA Ratio
NNPA Ratio
PCR (Excl Tech. write off)
E: MOSL Estimates
(%)
2018E
90,584
12,443
1.3
0.2
86.3
15 July 2015
15

HDFC Bank
Financials and valuations
Ratios
Y/E March
Spreads Analysis (%)
Avg. Yield-Earning Assets
Avg. Yield on loans
Avg. Yield on Invt
Avg. Cost-Int. Bear. Liab.
Avg. Cost of Deposits
Interest Spread
Net Interest Margin
Profitability Ratios (%)
RoE
RoA
Int. Expense/Int.Income
Fee Income/Net Income
Non Int. Inc./Net Income
Efficiency Ratios (%)
Cost/Income*
Empl. Cost/Op. Exps.
Busi. per Empl. (INR m)
NP per Empl. (INR lac)
* ex treasury
Asset-Liability Profile (%)
Loans/Deposit
CASA Ratio
Investment/Deposit
CAR
Tier 1
79.2
48.4
39.5
16.5
11.6
80.9
47.4
37.7
16.8
11.1
82.5
44.8
32.9
16.1
11.8
81.1
44.0
36.9
16.8
13.7
82.4
44.0
34.8
15.6
12.9
83.1
44.4
33.7
14.4
12.2
83.7
44.7
32.6
13.3
11.4
49.2
36.6
66.5
0.8
49.9
35.3
72.4
1.0
45.8
34.7
87.9
1.2
47.0
34.0
102.7
1.4
46.5
34.0
116.5
1.6
45.4
34.3
138.8
1.8
44.1
35.1
166.6
2.1
18.7
1.7
53.8
29.3
31.0
20.3
1.8
54.9
27.3
30.2
21.3
1.9
55.1
27.2
30.0
19.4
1.9
53.8
24.5
28.7
18.4
1.9
53.4
23.8
27.3
19.2
1.9
52.1
23.0
26.2
20.1
1.8
51.8
22.0
24.8
10.4
11.9
7.7
6.1
5.6
4.4
4.8
10.6
12.3
7.5
6.4
6.0
4.2
4.8
10.3
11.7
7.8
6.2
5.7
4.1
4.6
9.9
11.1
7.4
5.8
5.7
4.1
4.6
9.7
10.7
7.5
5.6
5.6
4.0
4.5
9.4
10.5
7.3
5.4
5.3
4.0
4.5
9.5
10.5
7.3
5.4
5.3
4.1
4.6
2012
2013
2014
2015
2016E
2017E
2018E
Valuation
Book Value (INR)
Change (%)
Price-BV (x)
Adjusted BV (INR)
Price-ABV (x)
EPS (INR)
Change (%)
Price-Earnings (x)
Dividend Per Sh (INR)
Dividend Yield (%)
E: MOSL Estimates
127.4
16.8
8.6
126.4
8.7
22.0
30.4
49.8
4.3
0.4
152.1
19.4
7.2
150.7
7.3
28.3
28.4
38.8
5.5
0.5
181.3
19.2
6.1
178.9
6.1
35.3
25.0
31.0
6.9
0.6
247.4
36.5
4.4
244.9
4.5
40.8
15.3
26.9
8.0
0.7
284.9
15.2
3.8
282.1
3.9
49.0
20.2
22.4
9.8
0.9
330.2
15.9
3.3
326.5
3.4
59.0
20.5
18.6
11.8
1.1
385.5
16.7
2.8
382.0
2.9
72.1
22.1
15.2
14.4
1.3
15 July 2015
16

HDFC Bank
NOTES
15 July 2015
17

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