HDFC Bank is expected to report a double-digit year-on-year (YoY) growth in net profit for the quarter ended December, aided by the healthy rise 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 brokerages.
Net interest income, the difference between interest earned and interest expended, 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).
Sequentially, the net interest income will see a moderate 6% growth while profit may drop 1.5%.
India’s largest private sector lender is scheduled to release its earnings on Tuesday.
The provisional 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.
The 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 see on the earnings scorecard of HDFC Bank:
Kotak Equities
The brokerage believes that some of the moving variables should start looking comfortable post the December quarter. Key variables to watch for are steady state of cost of funds, and yield on loans.The brokerage expects gross NPL ratio to be stable. Near-term focus would be on the progress of NIM and the impact of PSL.
Motilal Oswal Securities
Business traction is expected to remain healthy, Margins are likely to see slight improvement from the lows of September quarter. Asset quality for the merged entity is expected to remain broadly stable. Business growth and earnings trajectory will be key monitorables.
Axis Securities
Advances growth was healthy, while deposit growth was lower than expectations. Margins are likely to have bottomed out in the September quarter, and is expected to improve QoQ.Operating expenses 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 monitorables.
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