Mumbai: Investors of HDFC twins -- HDFC Bank Ltd and HDFC Ltd, on Monday lost nearly $6.40 billion of its market value tracking a fall in the local equity markets.

HDFC Bank slipped 3.5% to 2,294 with erasing over 25,000 crore market value while HDFC Ltd slumped 5.01% to 2,188.50 with eroding 20,000 crore of its market capitalisation. In last two sessions, HDFC Bank lost 5% while HDFC Ltd fell 7%. The benchmark Sensex Index fell 1% to 37,971.17 points.

Local equity markets fell for third sessions with dropping nearly 3.3% or erased 1,300 points after the government refused any respite to foreign investors registered as trusts from proposed super rich tax.

On Saturday, HDFC Bank Ltd reported 20% year on year its June quarter earnings on the back of robust net interest income of 23% driven by 15% loan growth and 10 basis points improvement in margin to 4.3%.

Provisions grew 23% quarter on quarter to 2,610 crore. Provision numbers were higher on account of Contingent provision of 165 crore, bank has stepped up its provisioning rate for unsecured book, higher provisions in Agri portfolio and general provision of 85 crore for HFC/NBFC sector.

Kotak Institutional Equities in a 21 July note believe that there are a few risks emerging – a few risks that we have highlighted in the past: Revenue growth could be slower from here as NIM, which is at peak levels, could decline on slower unsecured loan growth as well as slower than loan growth of CASA deposits and fee income has a high share coming from the cards business, which is slowing down, management is guiding for an improvement in cost-income ratio but a rising deterioration, if any from unsecured loans, could result in higher investments for collection efforts and gross NPL in retail is growing steadily, which implies that we are already past the best in the retail cycle. Credit costs have risen in recent years to 100 bps from 60 bps a few years earlier and a pullback in credit costs, looks a bit challenging.

"The balance sheet has started to slow and we need to see if there is any impact on earnings and asset quality. Despite a slowdown in the balance sheet, the share of unsecured loans continues to increase and is relatively high at 18% of loans. Any sharp slowdown in the high-yielding segment can impact operating profits while provisions could rise reflecting this change. Early warning NPL indicators are still stable," said Kotak Institutional Equities.

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