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FY17 Performance; HDFC shines but declining ROA sums up the Industry concern

Key Takeaways:

  1. Revenue Performance: HDFC holds out in NIM growth. At > 20%, it’s way ahead than SBI and other large banks. Of the midsize banks, IndusInd makes it mark at 34% growth. Among the PSU, Indian bank stands tall with a very healthy increase in operating profit at 32% and near doubling of net profit.
  2. Revenue Performance: In Fee income, SBI & HDFC does well in double digit growth, the midsize banks e.g. IndusInd, KMB also does well (Since Yes has a large corporate portfolio %, its fee income is expected to be on higher side)
  3. Operating Performance: ICICI & Axis are 2 large banks with deteriorating ‘Cost to Income’ compared to FY16. IDBI with NIM worsening & operating expense on the rise, is the worst hit with C/I rising by 61%
  4. Operating Performance: CASA seems to be only one parameter where all banks have done reasonably well, partly fueled by easy money from demonetization (refer CASA & C/I chart)
  5. Operating Performance: On flip side, ROA seems to be the indicator of the head wind faced by the banking industry. Nearly all the banks saw it drop from FY16 level except for KMB which stands out at >45% improvement in ROA
  6. Asset Performance: NPA remains a key concern for the banking industry. While public sector banks are nearly universally impacted, ICICI & Axis bank also stands out with higher NPA comparable to PSBs
  7. Profitability Performance: Since provision impacts the net profit, the ROA graph is nearly inversely proportional to NPA chart (refer ‘Asset Performance’ chart)

We have not covered the PCA status of some of these & a few others banks wrt RBI PCA norms & where they stand post FY17. That will be covered in our next article. Keep watching this space….


  1. RBI statutory financials reporting by individual banks accessed from the bank’s websites
  2. Investor presentation, Q4 FY17 press releases

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