Country’s largest private lender HDFC Bank may report up to 25 per cent year-on-year growth in net profit on Saturday for the quarter ended September 30. Market watchers also foresee strong credit growth on the back of robust performance from commercial & rural banking and corporate credit segments. Shares of HDFC Bank settled 3.40 per cent higher at Rs 1,441.10 on Friday. On the other hand, the benchmark BSE Sensex settled 1.20 per cent up at 57,920.
Overall, analysts also see a strong September quarter for banks driven by strong business growth momentum, stable net interest margins (NIMs), healthy operating profits and lower credit costs.
KR Choksey Research expects the overall asset quality to be stable across all the banks in Q2FY23. Credit cost is expected to be lower, led by moderating trend of slippages and a healthy improvement in recoveries and upgrades. We believe banks will hold adequate buffer provisions, which will act as a cushion against uncertain events.
While sharing its view on HDFC Bank, Systematix Shares and Stocks (India) said that HDFC Bank may post 24.70 per cent year-on-year growth in profit after tax on 13.60 per cent YoY growth in net interest income.
B&K Securities projected 20.70 per cent year-on-year and 15.90 per cent quarter-on-quarter growth in net profit for the private sector lender.
Net interest margin is expected to grow by 15 per cent year-on-year, according to Axis Capital. It also believes that HDFC Bank may post 18 per cent and 8 per cent growth in profit after tax and pre-provision profit, respectively, in Q2FY23.
“Gross slippages of HDFC Bank may decline 14 per cent YoY and 38 per cent QoQ,” Axis Capital said in a report.
KR Choksey sees nearly 20 per cent year-on-year growth net profit in Q2FY23 on account of healthy operating income and lower provisions. It also projected nearly 17 per cent growth in net interest income for HDFC Bank.
“In Q2FY23E, HDFC Bank registered a growth of 23.5 per cent YoY in advances driven by strong growth in rural and commercial banking. The corporate segment is expected to show a strong pick-up in Q2FY23. Net interest margins are expected to remain stable for the quarter. We expect other income to report sequential improvement. Operating expenses will continue to remain higher with increased spending on digital initiatives and branch expansions. The cost-to-income ratio is expected to be around 40 per cent. We expect asset quality to be stable for the quarter, led by lower slippages and healthy recoveries,” KR Choksey said in a report.
