HDFC Bank Q3: Analysts see profit up up to 17%; NIM can contract – World Affairs SRS

HDFC Bank Q3: Analysts see profit up up to 17%; NIM can contract

– World Affairs SRS

Analysts said HDFC Bank is set to post solid double-digit growth in net profit for the October-December quarter (Q3FY22) on the back of a healthy loan book and strong growth in net interest income. While it is net interest margin (NIM), there could be flat growth sequentially and slight contraction year-on-year, he said.

“HDFC Bank has already registered strong growth in the loan book as part of its initial update. Loan growth was up 15.4 percent year-on-year in the previous quarter, and deposit growth was up 13.8 percent year-on-year, up from 14.4 percent in the previous quarter, Morgan Stanley analysts said in their results expectation report.

Retail credit growth stood at 13.5 per cent year-on-year, compared to 13 per cent (4.5 per cent QoQ) in the previous quarter. Commercial and rural credit growth stood at 29.5 per cent y-o-y as against 27.5 per cent (6 per cent QoQ) in the previous quarter. Wholesale credit growth, meanwhile, stood at 7.5 per cent on a year-on-year basis, compared to 6 per cent (4.5 per cent QoQ) in the previous quarter.

This, the brokerage said, led to a 24.6 per cent year-on-year growth in the current account-savings account (CASA) as against 28.6 per cent, leading to an improvement in the CASA ratio to 47.1 per cent from 43 per cent in Q3 FY2011. percent and was 46.8 percent. In Q2FY22.

“Continuous recovery in CASA stock coupled with strong credit growth should substantially offset the potential pressure on loan yields (given falling rates). We therefore expect margin QoQ to remain flat at 4.1 per cent and net interest rates at 4.1 per cent.” Earnings (NII) is projected to grow at 13 per cent year-on-year.

Overall, analysts expect the NIM to be around 4.11-4.20 per cent. In Q3FY21, the NIM was 4.2 per cent, and it was 4.10 per cent in Q2FY22.

Meanwhile, NII expansion is expected to be in the range of 11 per cent YoY (2.4 per cent QoQ) to 14 per cent YoY (5.2 per cent QoQ). Overall, it will be between Rs 18,114 crore and Rs 18,606.5 crore.

An external figure from Axis Securities puts NII at Rs 19,287 crore, 18 per cent YoY and 9 per cent QoQ. NII was Rs 16,317.6 crore in Q3FY21 and Rs 17,684.4 crore in Q2FY22.

The lender is due to report its Q3FY22 earnings on Saturday, January 15.

operating and net profit

Analysts said the lender’s operating profit could grow by an average of 13 per cent (8.2 per cent quarterly) to Rs 17,100 crore, due to slower growth in other non-interest income.

That said, the fastest estimate pegs operating profit at Rs 17,817 crore (17.3 per cent YoY / 12.7 per cent QoQ), while the most conservative estimate sees it at Rs 16,227 crore (6.9 per cent YoY / 2.7 per cent QoQ). ,

On the other hand, net profit is growing by about 17 per cent year-on-year and 16.4 per cent sequentially, to the tune of Rs 10,284 crore.

Operating profit and net profit stood at Rs 15,186 crore and Rs 8,758.3 crore last year, and Rs 15,807 crore and Rs 8,834.3 crore, respectively, in the second quarter of FY22.

asset quality trends


Analysts at Motilal Oswal Financial Services said they would keep an eye on the impact on asset quality, especially on SMEs, agriculture and the unsecured book. Thus, they expect the slippage to remain high.”However, the bank keeps additional contingency provisions, which will limit the impact on profitability,” it said.

Global brokerage Nomura has reported a decline of Rs 7,260 crore as compared to Rs 10,732 crore in Q2 of FY22.

With regard to debt-loss provisions, Kotak Securities projected an 11.5 per cent year-on-year and 7.2 per cent QoQ at Rs 15,186 crore and Rs 15,807.3 crore, respectively, at Rs 16,939.7 crore.

MoFSL, on the other hand, has estimated Gross NPA Ratio at 1.3 per cent (vs. 1.4 per cent QoQ) and NNPA Ratio at 0.4 per cent (vs. 0.5 per cent QoQ).

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