HDFC Bank is expected to announce its December quarter results on Tuesday, January 16. Analysts and brokerage firms expect the bank to report good overall numbers for the December quarter However, net profit margin (NIM) may come under pressure from high capital costs.
Earlier this month, HDFC Bank reported its total advances amounted to ₹24,69,500 crore as on December 31, 2023, registering a growth of about 62.4% from ₹15,20,500 crore as on December 31, 2022.
Domestic personal loans increased 111% year-on-year and about 3% quarter-on-quarter (QoQ).
Commercial and rural banking loans increased by 6.5% and other corporate and wholesale loans (excluding erstwhile HDFC Limited non-personal loans) increased by 2%.
The Bank’s CASA ratio stood at approximately 37.7% as of December 31, 2023, compared to 44% as of December 31, 2022 and 37.6% as of September 30, 2023.
Shreyansh Shah, Research Analyst at StoxBox, expects the bank to witness strong growth in its business thanks to increased branch count and a well-functioning sales team , supported by the holiday season.
According to Shah’s estimates, deposits are expected to grow well in Q3FY24 due to attractive interest rates and increased fixed deposit (TD) mobilization. However, his CASA may have a small impact due to increased TD traction.
NIM is expected to range from 3.4% to 3.6% due to high capital costs. “We expect profitability and return on capital to improve due to increased disbursements, mainly for construction financing. As HDFC Bank already manages HDFC’s non-commercial portfolio Ltd. in the last quarter, we do not expect any further deterioration in asset quality in the current and upcoming quarters,” Shah said. Going forward, Shah expects the bank to have a strong coverage ratio. Securing healthy liquidity thanks to the merger effect, with returns supported by strong revenue growth across the various lending segments. Additionally, a better mix of lending sources , especially focusing on the retail sector, will help the bank perform better than banks in the same industry. Estimates from brokerage firm Motilal Oswal Financial Services suggest that HDFC Bank could record a 32.5% year-on-year increase in net profit, while net interest income could grow by 26.8% over the same period last year. same period in the third quarter of fiscal 2024.
HDFC Bank’s operating profit, according to Motilal Oswal, could increase by 26.2% year-on-year.
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