What HDFC and ICICI Q2 Earnings Report Mean for Share Buyers?

India’s two major private limited banks ICICI Bank and HDFC Bank have released their Quarter 2 results. While HDFC Bank witnesses 15% profit, ICICI Bank suffers 34% loss due to Bad Loans.

HDFC Bank Makes a Lead while Managing its Gross NPA

HDFC Bank in its quarter 2 result showed 15% profit that took the net profit to Rs 2, 101.12 crores which is 275 crore more than last year’s profit in Q2 of Rs 1, 826.50 crores. The net profit was higher than the expectations of the analyst leading to a sudden rise in share prices. The market that closed at Rs 1699.05 yesterday took a positive ride and closed at Rs 1704.95, with a rise of 0.31%. In the last 7 days, the share price of HDFC has shown a rise and fall with its highest at Rs 1723.00 on October 23 to its lowest at Rs 1678.00 on October 25. Now it is again taking a positive route increasing the expectations of shareholders and investors.

The private sector housing and development bank did well in managing its NPA with an unchanged 0.65% in individual NPA and 2.18% increase in non-individual NPA that was 2.09% on sequential basis.

ICICI Bank Suffers Loss but Investors are still investing in Both the Banks:

ICICI Bank showed an unexpected fall in its profit for the Q2 with a profit of only Rs 2,058.09 in comparison to the last year’s profit of Rs 2570.10 crores, a sharp fall of 33.7%. ICICI Bank that experienced a fall in its share price on October 19 has now been recovering but the Q2 results have again led to a fall by 0.17% which is quite minimal. The share price as of today stood at Rs 300.65 remaining nearly the same of yesterdays. The reason for such a huge loss of around Rs 400 crores is due to bad loans.

Gross NPA for the bank has now rose to Rs 44, 488.54 crores with a rise of 36.7% in comparison to last year’s Rs 32, 547.50 crores. Though the NPA addition for this year’s Q2 has declined to Rs 4, 674 crores that was Rs 4976 crores in 2016, Q2. For Q1, NPA addition was Rs 2609 crores making ICICI Bank as the number 1 bank with highest bad loans.

Still you can go for investment in both the Banks:

Experts opine that going with HDFC and ICICI is a safe play as in normal market conditions, HDFC can give a return of around 15% annually. HDFC maintains stable asset quality on YoY basis with deposits up by 16.5% and its operational performance is in line.

Chanda Kochhar, CEO of ICICI Bank said that NPAs in 2017-18 are expected to be lower in comparison to the last FY. Given the situation, investors are still investing in both ICICI and HDFC Bank with a hope of long term gains.