HDFC Bank is expected to report a double-digit year-on-year (YoY) growth in net profit for the quarter ended December, helped by the healthy increase in net interest income.
The private sector lender’s net profit is seen rising 28.4% YoY to Rs 15,739 crore, according to the average of estimates given by eight brokers.
Net interest income, the difference between interest earned and interest spent, is likely to grow 21% YoY to Rs 29,031.4 crore.
The numbers as such are not strictly comparable on a YoY basis, due to the merger of Housing Development Finance Corporation (HDFC).
Consecutively, the net interest income will see a moderate growth of 6% while profit may fall 1.5%.
India’s largest private sector lender is scheduled to release its earnings on Tuesday.
The interim update for Q3 released by the bank showed that deposit growth missed the guided quarterly average of Rs 1 trillion in the nine months ended December.
Overall loan growth at 4% sequentially was softer than 5% in the September quarter, driven by retail loans.
Here’s a summary of what analysts expect to see on HDFC Bank’s earnings scorecard:
Kotak Equities
The brokerage believes that some of the moving variables should start to look comfortable after the December quarter. Key variables to observe are a stable state of cost of funds, and performance of loans. The brokerage expects gross NPL ratio to be stable. Short-term focus would be on the progress of NIM and the impact of PSL.
Motilal Oswal Securities
Business traction expected to remain healthy, Margins likely to see slight improvement from September quarter lows. Asset quality for the merged entity is expected to remain broadly stable. Business growth and earnings trajectory will be key to monitor.
Axis Assets
Advance growth was healthy, while deposit growth was lower than expectations. Margins are likely to bottom out in the September quarter, and are expected to improve QoQ. Operating expense ratios are likely to remain stable QoQ. Asset quality and Credit Costs to remain stable. Management commentary on business growth and margin improvement trajectory will be key to monitor.
(You can now subscribe to our ETMarkets WhatsApp channel)
(Disclaimer: Recommendations, suggestions, opinions and views given by the experts are their own. These do not represent the views of Economic Times)