HDFCB reported strong 21.6% y-o-y loan growth, that translated into an NII growth of 14.5% y-o-y (3% below Nomura estimates) and core PPOP growth of 14.7% y-o-y. NIM (on average assets) was flat q-o-q at 4% despite strong retail and SME loan growth sequentially. Fee income fared better than we had expected (+38% y-o-y). Management did not offer any further clarity on the merger dynamics. HDFC Bank’s lending subsidiary, HDB Financials, continued to record improved performance – NII +9.6% y-o-y, PPOP +0.4% y-o-y and net income ~4x y-o-y. Stage 3 improved to 4.95% from 4.99% in Q4FY22. We reiterate Buy …
