Since the bank completed one year of its merger with erstwhile HDFC Ltd. on July 1, 2024, analysts expect the merged entity’s loan and deposit growth to stabilise going forward.
For the quarter under consideration (Q1FY25), they expect HDFC Bank to report flat to marginal decline in net profit (profit after tax) on a quarter-on-quarter (QoQ) basis.
Operationally, HDFC Bank’s Net Interest Income (NII) may also remain flat on a quarterly basis amid muted growth in loans and deposits. HDFC Bank’s Net Interest Margin (NIM) may also see a slight contraction in Q1FY25.
Here’s what leading brokers expect from HDFC Bank’s Q1FY25 results on July 20, 2024:
Name
Nomura expects HDFC Bank to report a 1 percent quarter-on-quarter decline in loan book from Q1FY25 to Rs 24.65 trillion, along with unchanged deposit growth at Rs 23.79 trillion. Nomura expects HDFC Bank to report a 1 percent sequential decline in NII to Rs 28,910 crore.
However, on an annual basis, the loan portfolio could grow by 53 percent and deposits by 24 percent.
According to the report, NIM could contract by around 4 basis points quarterly/70 basis points annualised to 3.4 percent in the first quarter of FY25.
Nomura expects HDFC Bank’s net profit in the first quarter of fiscal 2025 to decline 13 percent from the March quarter to Rs 14,420 crore, but to rise 21 percent year-on-year.
Please note that Nomura’s quarterly estimates include the sale of the stake in Credila in the fourth quarter of fiscal 2024 and the proceeds from the sale of a 50 percent stake in Kotak General Insurance in the first quarter of fiscal 2025.
BNP Paribas
BNP Paribas has slightly better, but moderate, estimates for HDFC Bank for Q1FY25.
It expects HDFC Bank’s net profit in Q1FY25 to come in at Rs 16,536 crore, up 0.1 percent QoQ from the profit of Rs 16,512 crore reported in Q4FY24. On a YoY basis, this would be an increase of 38.4 percent from the Rs 11,952 crore seen in Q1FY24.
The NII is expected to rise 3 percent on a quarterly basis from Rs 29,076.8 crore to Rs 29,936 crore, and 26.9 percent on a yearly basis from Rs 23,599 crore.
Also, operating profit before provisions (PPoP) is expected to decline 16.2 percent quarter-on-quarter and increase around 31 percent year-on-year to Rs 24,536.9 crore.
PPoP stood at Rs 29,274.2 crore in Q4FY24 and Rs 18,772 in Q1FY24.
ICICI Securities
Analysts at ICICI Securities expect HDFC Bank to report around 2.5 percent annualised deposit growth, but “even lower quarter-on-quarter loan growth”.
Advances could reach Rs 25.22 trillion, up 56 percent year-on-year and down 2 percent quarter-on-quarter.
“However, credit rationing and sharper focus could help NIMs QoQ. Slippages are likely to increase QoQ, led by seasonality,” it said in its earnings preview report.
In absolute terms, brokers estimate NII at Rs 29,567.8 crore (up 25.3 percent YoY/1.7 percent QoQ); PPoP at Rs 23,170.4 crore (up 23.4 percent YoY/down 21 percent QoQ); PAT at Rs 15,329.5 crore (up 28.3 percent YoY/down 7.2 percent QoQ).
Furthermore, net inflation (NIM) is expected to be 3.6 percent, compared to 4.3 percent year-on-year and 3.63 percent quarter-on-quarter.
ICICI Securities expects HDFC Bank’s provision coverage ratio (PCR) to decline to 74 per cent in the first quarter of FY25, gross non-performing asset (GNPA) to rise to 1.3 per cent and NNPA to remain unchanged at 0.3 per cent, among other forecasts.
Sharekhan
Sharekhan also predicts a weak sequential performance from HDFC Bank in Q1FY25. It sees net profit at Rs 15,272 crore (up 28 per cent YoY/down 7.5 per cent QoQ). NII is projected at Rs 29,276 crore (up 24 per cent YoY/down 0.7 per cent QoQ).
Sharekhan said the bank’s asset quality is expected to remain largely stable, except in the agriculture segment.
“NIMs expected to be flat on a quarterly basis. Key areas to monitor are potential progress in NIMs and outlook for loan/deposit growth,” the report said.
Emkay Global
According to analysts at Emkay Global, growth will be moderate with slippages marginally elevated due to stress in the KCC book. “Deposit growth (on a QoQ basis) and margin maintenance will remain important monitorable factors,” the report said.
It expects a net profit of Rs 16,616.2 crore (down 8.5 percent YoY/up 0.6 percent QoQ). Meanwhile, NII is estimated at Rs 29,213.6 crore (up 1 percent YoY/up 0.5 percent QoQ).
First print: Jul 18, 2024 | 11:20 AM IST