Seven Banks Including HDFC Bank, ICICI Bank To Declare Earnings This Saturday — What To Watch Out For

This weekend at least seven banks are set to announce their July-September quarter results. This would include heavy-weights like HDFC Bank, ICICI Bank and Punjab National Bank, but also mid-sized private banks including Federal Bank, IndusInd Bank, Yes Bank and RBL Bank.

Understandably, those reviewing numbers will be overwhelmed with the influx of data from all these counters. The broader banking and finance industry is passing through a phase of margin compression, uneven growth and still-stabilising asset quality in key retail businesses.

A day before the results, the Nifty Bank index has hit an all-time high, driven by the expectations from the large bank counters.

There are a few handy pointers to keep in mind as you parse through these results. NDTV Profit explains below:

India's largest private bank, HDFC Bank, will likely have a no-noise quarter, with margin movement being the key focus area. While margins are expected to moderate about 11 basis points sequentially, the profit growth is estimated to remain largely flat.

With the provisional figures already released, gross advances are expected to grow a shade under 10%, while deposits should rise by 12% from a year ago.

ICICI Bank is estimated to see its margins improve owing to strong performance on the low cost deposit front. This quarter may see return on assets being weighed down by lack of large treasury gains. Net profit however is estimated to largely remain flat.

We will be keenly watching out for corporate loan growth, even as retail loans still await the full benefit of GST rate cuts coupled with lower lending rates.

At Punjab National Bank, the double digit credit and deposit growth will be key earnings drivers. Commentary around festive season growth triggers and corporate lending will also be things to monitor.

Among the mid-sized banks, all eyes will be on RBL Bank and the news it brings. NDTV Profit reported this week that Emirates NBD is set to buy 60% stake in RBL Bank for $3 billion. While earnings will give us a picture of how the bank has managed its credit card and microfinance stress, the deal announcement is expected to drive future re-rating for the stock.

A large capital infusion alongside stable results could prove to be the gamechanger that RBL Bank needs. Over the last one year, the stock has been quietly rising in anticipation that change is just around the corner. In the past year, the RBL Bank stock is up nearly 50%.

RBL Bank is estimated to report a slightly lower net profit for the quarter, while its net interest margin may expand nominally by 5 basis points to 4.55%. General banker commentary seems to suggest that credit card slippages are largely under control, which will prove to be a booster shot for RBL Bank.

For IndusInd Bank this quarter might prove to be the start of a new era as well. Former Axis Bank top executive, Rajiv Anand, took over as CEO of the bank in the middle of the second quarter. This will be the first quarterly result Anand announces at the bank.

The broad expectation is that the January-March period was the clean-up quarter, with June quarter seeing a period of consolidation. Under Anand, we could expect the bank move toward a growth path again. Net profit will likely be up modestly on a sequential basis, with credit costs inching lower.

Federal Bank's push to increase its margins will be the key discussion point this quarter as well. In the second quarter, Federal Bank concluded one year under its new CEO KVS Manian. While the bank has made a dedicated push to develop higher revenue businesses, the impact of the rate cuts will be weighing down on ambition. Analysts expect operating profit growth to remain weak, owing to core revenue not rising. Moreover, bad loan ratios may see a marginal uptick, driven by microfinance.