HDFC Bank Q4 Results Preview: Softer Credit Growth Impact To Be Offset By Improving Margins
Elara Securities and Deven Choksey Research expect HDFC Bank to report a moderate uptick in loan growth.
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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.
