HDFC Bank is expected to report another quarter of steady earnings growth, with Bloomberg estimates pointing to a 9% rise in standalone net profit, helped by a sharp decline in provisions. The lender will report its Q1 results on Saturday.
While net interest income is expected to remain healthy, Bloomberg estimates indicate net interest margin could ease to 3.32% from 3.38% in the March quarter. Asset quality is expected to remain stable, with gross non-performing assets seen unchanged at 1.15%, reinforcing expectations of steady credit performance.
HDFC Bank Q1 Preview - Bloomberg Estimates (Standalone, YoY)
- Net interest income seen 8.9% higher at Rs 34,256.57 crore versus Rs 31,440 crore
- Net interest margin seen at 3.32% versus 3.35% (3.38% QoQ)
- Net profit seen 9% higher at Rs 19,720 crore versus Rs 18,155 crore
- Provisions seen 74% lower at Rs 3,678.3 crore versus Rs 14,441.6 crore
- Gross NPA seen unchanged at 1.15% (QoQ)
- Operating profit seen lower at Rs 28,795.3 crore versus Rs 35,733.96 crore
The outlook follows HDFC Bank's business update, which showed period-end advances under management rose about 12.4% year-on-year, gross advances increased about 15.4%, while deposits grew about 14.7%, indicating healthy business momentum entering the June quarter.
Margins are likely to be the key talking point this quarter. Analysts broadly expect loan and deposit growth to remain healthy and asset quality to stay resilient. The focus, however, will be on whether the bank can protect profitability while managing seasonal pressure on net interest margins and continuing to improve operating efficiency.
Here's what analysts expect from HDFC Bank Q1 results
Citi
- Loan growth is expected to improve to around 12-14%, led by corporate lending and business banking.
- Agriculture and gold loans are likely to outpace the broader retail portfolio, while mortgages and credit cards may grow more slowly.
- Deposits are expected to continue growing faster than the banking system, supporting market share gains.
- NII is projected to rise around 2.5% sequentially and 8% YoY, although seasonal agricultural interest reversals could weigh on reported margins.
- Asset quality is expected to remain stable across unsecured retail, SME and corporate portfolios despite seasonal agricultural stress.
- Credit costs are estimated at around 45 basis points.
- Cost growth is expected to remain contained, with improving operating leverage as branch expansion matures and efficiency initiatives take effect.
Motilal Oswal
- Loan growth is expected to remain healthy, supported by corporate, SME and improving retail demand.
- Management is expected to maintain a constructive growth outlook across corporate, mortgage and retail lending.
- Deposit growth continues to outpace advances, helped by strong retail deposit mobilisation and branch expansion.
- Margins are expected to improve gradually over time as expensive borrowings decline.
- Asset quality is expected to remain among the strongest in the sector, supported by healthy provision buffers.
- The brokerage expects business momentum, deposits and gradual margin improvement to support steady earnings growth over the medium term.
DAM Capital
- Business growth is expected to improve modestly and move closer to industry loan growth.
- Margins are likely to remain broadly stable as lower borrowing costs continue to provide support.
- Other income could receive a boost from the HDB IPO stake sale.
- Seasonal agricultural slippages may increase during the quarter, although overall asset quality is expected to remain stable.
Kotak Institutional Equities
- Reported loan growth is expected to remain slightly below the industry average.
- Deposit growth is expected to remain robust, with the credit-deposit ratio rising to around 95%.
- Net interest margin is expected to stay broadly unchanged during the quarter.
- Gross NPA ratio is likely to remain stable, with slippages estimated at around 1.3% of loans.
- Investors are likely to focus on the pace of margin recovery and mobilisation of FCNR deposits.
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