Earnings Outlook
HDFC Bank PAT seen down 5% QoQ on fall in advances
This story was originally published at 16:23 IST on 18 July 2024
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By Richard Fargose
MUMBAI – HDFC Bank's net profit for Apr-Jun is likely to fall 4.6% from the previous quarter to 157.52 bln rupees, according to the average of the estimates of 13 brokerage houses. The expected moderation in bottomline is due to a drop in gross advances during the quarter.
Estimates for the bank's net profit were in a range of 144.2 bln rupees to 166.2 bln rupees. The net profit for Apr-Jun is seen rising 31.8% on year, but the figures for the quarter ended June include those of HDFC Ltd and, hence, are not comparable with the corresponding period last year.
This is the fourth quarter for which the bank will report its earnings after the merger of parent Housing Development Finance Corp.
"HDFC Bank's Q1FY25 (Apr-Jun) business update came out weak, with softness in advances and deposit numbers," Manish Chowdhury head of research at StoxBox, in a note. "In addition, the bank's corporate and other wholesale loan book saw a dip sequentially."
As per provisional numbers provided to exchanges, HDFC Bank's gross advances fell 0.8% to 24.87 trln rupees as of Jun 30 from 25.08 trln rupees a quarter ago.
The bank's domestic retail loans grew around 186 bln rupees on quarter, while commercial and rural banking loans grew by around 72 bln rupees from a quarter ago. However, wholesale loans saw an on-quarter fall of 266 bln rupees, the provisional data showed.
The bank's deposits were 23.79 trln rupees as on Jun 30, up 24.4% on year, and flat on quarter. The current accounts and savings accounts deposits grew 6.2% on year to 8.64 trln rupees as of Jun 30, but saw an on-quarter fall of 5%.
According to the average of the estimates of 13 brokerages, the net interest income of the bank is expected to rise only 1.7% on quarter and 25.3% on year to 295.71 bln rupees. India's largest private sector lender is scheduled to detail its Apr-Jun earnings on Saturday.
Analysts and investors will closely track the management's commentary for insight on future business growth and earnings trajectory, branch expansion plans, and strategy to garner deposits in an increasing competitive environment.
Most brokerage firms expect the bank's net interest margins to remain stable on quarter in Apr-Jun. In Jan-Mar, the core net interest margin was 3.44% on total assets and 3.63?sed on interest-earning assets.
"Margins may increase slightly on quarter due to better loan mix," Prabhudas Lilladher Pvt Ltd said in a pre-earnings report. Most analysts expect the bank to witness a marginal deterioration in asset quality due to seasonal factors.
"Slippages are slightly elevated due to stress in the KCC (Kisan Credit Card) book," Emkay Global Financial Services Ltd said. The bank's gross non-performing asset ratio fell to 1.24% as on Mar 31 from 1.26% a quarter ago, but the net NPA ratio increased to 0.33% from 0.31%.
At 1358 IST, shares of HDFC Bank were 0.1% lower at 1,619 rupees on the National Stock Exchange.
Following are the Apr-Jun earnings estimates for HDFC Bank based on reports compiled by Informist from 13 brokerage houses:
Brokerage firm |
Net interest income (in mln rupees) |
Net profit(in mln rupees) |
| Anand Rathi Share and Stock Brokers | 300,211 | 157,958 |
| Axis Securities Ltd | 298,320 | 159,310 |
| Emkay Global Financial Services Ltd | 292,136 | 166,162 |
| IDBI Capital Market Services Ltd | 297,993 | 154,388 |
| Kotak Institutional Equities | 299,752 | 160,660 |
| KR Choksey Research | 299,117 | 158,549 |
| Motilal Oswal Financial Services Ltd | 293,400 | 154,600 |
| Nirmal Bang Equities Pvt Ltd | 298,164 | 163,121 |
| Nomura Equity Research | 289,100 | 144,200 |
| Nuvama Wealth Management Ltd | 296,600 | 157,200 |
| Prabhudas Lilladher Pvt Ltd | 294,781 | 154,948 |
| Sharekhan Ltd | 292,760 | 152,720 |
| YES Securities (India) Ltd | 291,931 | 163,999 |
| Average | 295,713 | 157,524 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Avishek Dutta
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