HDFC Bank's shares rose nearly 2.5 per cent in the Monday trading session after the private lender reported improved margins for a second consecutive quarter, and said it will normalise a key liquidity ratio going forward.
HDFC Bank stock traded at Rs 1,640 with 2.03 per cent gain in the Morning session on the National Stock Exchange (NSE).
HDFC Bank also traded as one of the top gainers in the Nifty Bank index which was up 0.05 per cent.
The bank stated that as deposits will increase more quickly than loans, it intends to lower its loan-to-deposit ratio (LDR) in the upcoming quarters.
"Going forward, the bank’s strategy will be to focus on profitable deposit-led advances growth and the management will refrain from aggressive pricing strategies to garner deposits," said Systematix Institutional Equities.
HDFC Bank's core net interest margin (NIM) on total assets increased to 3.47 per cent from 3.44 per cent in the previous quarter, and the bank's standalone net profit for the June quarter exceeded analyst projections.
"We are encouraged to see HDFC Bank could deliver another three-basis-point quarter-on-quarter expansion in NIMs during Q1,” analysts at Jefferies said.
Following its merger with parent company Housing Development Finance Corp (HDFC) in July of last year, HDFC Bank started to experience margin pressure due to HDFC's increased borrowing costs and lower-yielding loan portfolio, which alarmed analysts and investors.
NIM has increased slightly for the lender over the last two quarters, though, according to Jefferies, which is a result of both a decrease in the percentage of low-yielding corporate loans and the payback of HDFC's higher cost liabilities.
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