HDFC Bank's Q1 provides some relief to investors despite higher bad loans

Notably, 97-98 per cent of the customers under moratorium have no overdue and have received their salary, indicating no major concern

HDFC Bank’s June 2020 quarter (Q1) numbers, reported last Saturday, offer comfort to investors on the asset quality front with small moratorium book, accelerated recognition of non-performing assets (NPAs), and higher provisioning. Therefore, despite higher bad loans and a sharp fall in retail loan originations in Q1, the stock of HDFC Bank jumped 3.1 per cent on Monday, outperforming the Nifty Bank index, which gained 1.6 per cent.

In Q1, gross NPAs or bad loans were up 9 per cent quarter-on-quarter to Rs 13,773.5 crore, mainly because of the accelerated NPA recognition based on the bank's analytical tool. Analysts believe this