...July 22, 2019 SINGAPORE (S&P Global Ratings) July 22, 2019--HDFC Bank Ltd.'s higher provisions on its unsecured loans are timely and provide a buffer against potential deterioration in asset quality. For the quarter ended June 30, 2019, the bank reported an about 60% rise in such costs due to stress in agricultural loans, accelerated provisioning against unsecured loans, as well as higher contingency provisions. The provisions do not impact our rating on HDFC Bank (###-/Stable/A-3) given the strong earnings and ample headroom in the bank's capital to absorb the provisions. We view HDFC Bank's higher provisions as a cautionary step in light of a tougher operating environment, including slow consumption and sector-specific problems such as liquidity stress in nonbank financial institutions (NBFIs) and housing finance companies. As of June 30, 2019, 54% of the bank's domestic loans are from the retail segment and about a third of them are unsecured. Of the total loans, 11%-12% are personal...
