Earnings Outlook
HDFC Bank PAT seen up just 7% as deposit growth outpaces loan
This story was originally published at 18:32 IST on 18 July 2025
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By Kabir Sharma
MUMBAI – Navigating its way through post-merger adjustments, India's largest private sector lender HDFC Bank is expected to report just 7% rise in its net profit for the quarter ended June, limited by its deposit growth outpacing the loan growth, according to brokerages tracking the lender. However, the bottom line will be supported by an expansion in the margins of the bank in a quarter where most peers are struggling with contracting net interest margins.
According to an average of estimates from 15 brokerage firms, the bank is seen reporting a net profit of INR 173.12 billion for the quarter ended June, higher than INR 161.75 billion reported in the year ago period. Sequentially, the bank is expected to report a 1.7?ll in its bottom line due to softer loan growth, brokerages said. The bank is scheduled to detail its earnings for the Apr-Jun quarter on Saturday.
Shares of the bank have risen 4.2% since it declared earnings for the Jan-Mar quarter on Apr. 18. On Friday, shares of the bank closed 1.5% lower at INR 1,957.40 on the National Stock Exchange. All 23 brokerages tracking the bank have recommended a buy rating on its stock.
The bank has been in the headlines recently albiet for the wrong reasons after its Managing Director and Chief Executive Officer Sashidhar Jagdishan was accused of corruption and breach of trust along with violation of some regulatory norms by the Lilavati Kirtilal Mehta Medical Trust in June. The bank, however, dismissed the allegations as "baseless and malicious". Legal proceedings are ongoing in the matter.
As a consquence of the merger with HDFC Ltd. and as the bank focuses on improving its loan-to-deposit ratio, the deposit growth of the bank has been outpacing the loan growth. "Deposit growth remained strong at 14% on year, outpacing loan growth of 5.4% on year, aided by network expansion and a digital-first strategy. Loan growth was led by retail and commercial and rural banking, which together form over 78% of the book," Motilal Oswal Financial Services Ltd. said in a note.
"The headline reported number was slower-than-industry- average on loan growth as strong efforts are being made to improve their CD (credit to deposit) ratio. CD ratio has improved on quarter to 95%. Deposits grew strong at 16% on year," Kotak Institutional Equities said in a note. HDFC Bank's loan growth trailed the growth in deposits as of Jun. 30, rising 6.7% on year to INR 26.53 trillion and 0.4% sequentially, the bank said in an exchange filing earlier this month. The bank's deposits grew a healthy 16.2% on year to INR 27.64 trillion. Sequentially, they were up 1.8%.
Kotak also expects the gross non performing loans ratio to be stable with slippages at 1.3% of loans. The gross non-performing loans ratio fell to 1.33% as on Mar. 31 from 1.42% a quarter ago. However, it was up 9 basis points from 1.24% a year ago. The net non-performing asset ratio rose on-year to 0.43% from 0.33%. Sequentially, the net non-performing loan ratio improved slightly from 0.46%.
"Slippages would be higher on sequential basis due to seasonality. Provisions will be higher on sequential basis as the bank will utilise gain on sale of HDB Financial Services shares to increase floating provision," YES Securities Ltd. said in a note. Slippages of the bank declined to INR 75 billion in Jan-Mar from INR 88 billion in Oct-Dec. Recoveries and upgrades of the bank also improved to INR 50 billion in the March quarter from INR 40 billion a quarter ago.
The core income of the bank, its net interest income, is expected to increase by a nominal 6.2% on year in the quarter ended June to INR 316.85 billion. However sequentially, the net interest income is expected to moderate slightly from INR 320.66 billion in Jan-Mar. "NII growth will be slightly slower than average loan growth due to a fall in yield on advances outpacing cost of deposits," YES Securities said.
The net intererst margin of the bank is seen improving on an yearly basis, brokerages said. Net interest margin of the largest private sector lender rose to 3.5% in Jan-Mar from 3.4% in Oct-Dec.
InCred Research Services Pvt. Ltd. said it believes "...HDFC Bank can outperform ICICI Bank over the next few years with a broadly similar earnings growth trajectory and healthy deposit growth delivery."
Brokerages said the outlook on the deposit growth and strategy on improving the bank's credit-to-deposit ratio further will be in focus. Guidance on margins and asset quality will also be watched, brokerages said. Following are the Apr-Jun earnings estimates for HDFC Bank based on reports from 15 brokerage firms in descending order by the estimate of net profit:
| Brokerage | Net Interest Income (In INR million) | Net Profit (in INR million) |
| InCred Research Services Pvt Ltd | 3,11,000.00 | 2,44,000.00 |
| Dolat Capital Market Pvt Ltd | 3,15,985.00 | 1,79,650.00 |
| Kotak Institutional Equities | 3,14,084.00 | 1,78,374.00 |
| Anand Rathi Share and Stock Brokers Ltd | 3,22,915.00 | 1,77,001.00 |
| Antique Stock Broking Ltd | 3,17,063.00 | 1,75,824.00 |
| YES Securities (India) Ltd | 3,22,903.00 | 1,71,927.00 |
| IIFL Capital Services Ltd | 3,16,200.00 | 1,71,900.00 |
| Motilal Oswal Financial Services Ltd | 3,18,961.00 | 1,71,269.00 |
| Nuvama Wealth Management Ltd | 3,15,800.00 | 1,71,100.00 |
| Nomura Equity Research | 3,11,800.00 | 1,68,700.00 |
| ICICI Securities Ltd | 3,12,029.00 | 1,67,419.00 |
| IDBI Capital Market Services Ltd | 3,20,308.00 | 1,67,201.00 |
| Nirmal Bang Equities Pvt Ltd | 3,20,364.00 | 1,64,388.00 |
| Prabhudas Lilladher Pvt Ltd | 3,14,306.00 | 1,64,222.00 |
| Emkay Global Financial Services Ltd | 3,19,046.00 | 1,23,818.00 |
| Average | 3,16,850.93 | 1,73,119.53 |
End
Edited by Akul Nishant Akhoury
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