Global brokerage firms maintained their bullish view on HDFC Bank after it posted a 21 per cent rise in net profit on Saturday for the June quarter on the back of strong retail lending. Net profit increased to Rs 5,568 crore in Q1FY20 over Rs 4,601 crore in the corresponding quarter last year. The results came in line with market expectations as analysts had expected the bank to clock a net profit of Rs 5,600 crore for the quarter, Refinitiv data showed. Morgan Stanley maintained ‘Overweight’ on HDFC Bank with a target price of Rs 3,000 per share.

The global brokerage firm retained the rating due to a strong balance sheet. Domestic brokerage firm Motilal Oswal Financial Services said that the bank’s performance remained strong, although business growth has shown moderation, reflecting weakness in the consumption-linked lending segments and cautious stance on unsecured loans. Credit Suisse also maintained ‘Outperform’ rating on the private sector lender with a target price of Rs 2,700.

“Growth of the bank moderates in Q1 but core profitability stood intact.

PPOP growth expected to remain strong,” Credit Suisse said.

However, it cut FY20 and FY21 EPS by 3 per cent.

Shares of the lender were trading over 2 per cent down at Rs 2,326 at around 9.27 am (IST), while the benchmark BSE Sensex was down 295 points, or 0.77 per cent, at 38,041.32 at around the same time.

After providing Rs 2,965.4 crore for taxation, the company earned a net profit of Rs 5,568.2 crore, an increase of 21 per cent over the quarter ended June 30, 2018, the bank said in a statement. Net interest income for the quarter ended June 30, 2019 grew by 22.9 per cent to Rs 13,294.3 crore, from Rs 10,813.6 crore for the quarter ended June 30, 2018, driven by asset growth and a core net interest margin for the quarter of 4.3 per cent. Provisions and contingencies increased by 60 per cent YoY.

They rose 38.35 per cent QoQ to Rs 2,613.66 crore during the quarter under review. “We lower our growth estimates marginally - expect the bank to deliver 19 per cent and 20 per cent loan book and PAT CAGR over FY19-21, led by stable margins and continued improvement in operating leverage.

Maintain buy with a target price of Rs 2,750,” Motilal Oswal Financial Services said in a report. Asset quality impacted marginally in Q1FY20 with percentage of gross non-performing assets (NPA) increasing to 1.40 per cent for the quarter ended June 2019 against 1.36 per cent in the preceding quarter ended March 2019.