HDFC Bank Q4 Results Preview: Softer Credit Growth Impact To Be Offset By Improving Margins

As HDFC Bank Ltd. is set to announce its March quarter results on Saturday, analysts expect steady numbers on account of softer credit growth to reduce the loan-to-deposit ratio. This, even as they see marginal rise in profitability.

According to a poll by Bloomberg, India's largest private sector bank is likely to report standalone profit after tax of Rs 16,908 crore, up over 2% on year. The bank's bottomline was Rs 16,740 crore a quarter ago.

Elara Securities and Deven Choksey Research expect HDFC Bank to report a moderate uptick in loan growth — a little over 3% on quarter and 4% on year — as the bank continues to recalibrate its credit-to-deposit ratio, which is likely to trend lower within the 94-95% range. Yes Securities has pegged loan growth at around 2% sequentially.

HDFC Bank Q4 FY25 Estimates (Standalone, YoY)

• Net Profit seen up 2% at Rs 16,908 crore.

• NII seen rising nearly 8% to Rs 31,297 crore.

• NIM seen up by 18 bps at 3.42%, but flat QoQ.

According to the bank's provisional numbers, total advances grew 5.4% on year to Rs 26.4 lakh crore in January-March. In the December quarter, the bank's loans were Rs 25.4 lakh crore. Deposits increased by 16% to Rs 25.3 lakh crore on year and were at Rs 24.5 lakh crore a quarter ago.

Despite muted loan growth, the bank's net interest income is expected to grow by nearly 15% on year and 9% on quarter, supported by a reduction in excess borrowings.

"The bank's focus on optimising its liability mix and rationalising high-cost borrowings is likely to provide a key boost to margins, even as overall loan growth remains moderate," Deven Choksey said in a preview note.

Most brokerages expect net interest margins of the bank to remain broadly stable. But Yes Securities sees a sequential dip due to a decline in yield on advances outpacing the rise in deposit costs.

Asset quality of the bank is seen stable with lower slippages on a sequential basis. Emkay Global Financial Services and Elara Securities expects lower stress in the bank's Kisan Credit Card portfolio. However, Yes Securities has pinned a sequential rise in provisions, partly reflecting seasonality.