 "HDFC Bank Q1 preview: Muted loan, deposit growth to hit profit, margin QoQ")
HDFC Bank Q1FY25 results preview: Private lender HDFC Bank is scheduled to report the quarterly results for the April to June quarter (Q1) of the current financial year 2024-25 (FY25) on Saturday, July 20, 2024.
As 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 review (Q1FY25), they expect HDFC Bank to report flat to marginal decline in the net profit (profit after tax) on a quarter-on-quarter (Q-o-Q) basis.
Operationally, HDFC Bank's net interest income (NII) may also remain flat Q-o-Q amid muted loan and deposit growth. HDFC Bank's net interest margin (NIM) could also witness a slight contraction in Q1FY25.
Here's what key brokerages expect from HDFC Bank Q1FY25 results on July 20, 2024:
Nomura
Anticipating a 1 per cent Q-o-Q dip in Q1FY25 loan book at Rs 24.65 trillion, along with unchanged deposit growth at Rs 23.79 trillion, Nomura expects HDFC Bank to report 1 per cent sequential fall in NII at Rs 28,910 crore.
On a year-on-year (Y-o-Y) basis, however, loan book could grow 53 per cent and deposits could see a 24-per cent increase.
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NIM, it said, may contract around 4 basis points Q-o-Q/70 bps Y-o-Y to 3.4 per cent in Q1FY25.
That said, Nomura expects HDFC Bank Q1FY25 net profit to fall 13 per cent over the March quarter to Rs 14,420 crore, but rise 21 per cent Y-o-Y.
Do note, Nomura's quarterly estimates include Credila stake sale in Q4FY24 and proceeds from 50 per cent stake sale in Kotak General Insurance in Q1FY25.
BNP Paribas
BNP Paribas has slightly better, though muted, estimates for HDFC Bank for Q1FY25.
It expects HDFC Bank's Q1FY25 net profit to come at Rs 16,536 crore, up 0.1 per cent Q-o-Q from profit of Rs 16,512 crore reported in Q4FY24. On a Y-o-Y basis, this would be a 38.4 per cent rise from Rs 11,952 crore seen in Q1FY24.
NII, meanwhile, is seen rising 3 per cent Q-o-Q to Rs 29,936 crore from Rs 29,076.8 crore, and 26.9 per cent Y-o-Y from Rs 23,599 crore.
Pre-provision operating profit (PPoP), too, is expected to drop 16.2 per cent Q-o-Q/rise around 31 per cent Y-o-Y to Rs 24,536.9 crore.
PPoP was Rs 29,274.2 crore in Q4FY24 and Rs 18,772 in Q1FY24.
Prabhudas Lilladher
HDFC Bank's Q1FY25 business update came out weak, with softness in advances and deposit numbers. In addition, the bank’s corporate and other wholesale loan book saw a dip sequentially.
Though net profit is likely to show growth annually in Q1FY25, we expect marginal NIM compression primarily due to persistently high cost of attracting new deposits.
Further, this quarter may witness marginal deterioration in asset quality due to seasonal softness. On the operational front, we anticipate some deterioration in CASA, tight control on operating costs and a decline in provisioning.
ICICI Securities
Analysts at ICICI Securities expect HDFC Bank to report around 2.5 per cent Y-o-Y growth in deposit, but "even slower loan growth on a Q-o-Q basis".
Advances, it said, could be at Rs 25.22 trillion, up 56 per cent Y-o-Y/down 2 per cent Q-o-Q.
"Credit rationing and sharper focus, however, could aid NIMs Q-o-Q. Slippages are likely to jump Q-o-Q, led by seasonality," it said in its results preview report.
In absolute terms, the brokerages pegs NII at Rs 29,567.8 crore (up 25.3 per cent Y-o-Y/1.7 per cent Q-o-Q); PPoP at Rs 23,170.4 crore (up 23.4 per cent Y-o-Y/down 21 per cent Q-o-Q); PAT at Rs 15,329.5 crore (up 28.3 per cent Y-o-Y/down 7.2 per cent Q-o-Q).
Further, NIM is seen at 3.6 per cent vs 4.3 per cent Y-o-Y and 3.63 per cent Q-o-Q.
Among other key ratios, ICICI Securities expects HDFC Bank's Q1FY25 provision coverage ratio (PCR) to ease to 74 per cent; gross non-performing asset (GNPA) to rise to 1.3 per cent; and NNPA unchanged at 0.3 per cent.
Sharekhan
Sharekhan, too, projects a weak sequential performance by HDFC Bank in Q1FY25. It sees net profit at Rs 15,272 crore (up 28 per cent Y-o-Y/down 7.5 per cent Q-o-Q). NII is projected at Rs 29,276 crore (up 24 per cent Y-o-Y/down 0.7 per cent Q-o-Q).
Sharekhan said asset quality of the bank is expected to remain broadly stable except in Agri segment.
"NIMs are expected to be flat Q-o-Q. Key monitorable would-be progress of NIMs, and loan/deposit growth outlook," it said.
Emkay Global
According to analysts at Emkay Global, growth shall be moderated with slippages slightly elevated due to stress in the KCC book. "Deposit growth (on a Q-o-Q basis) and margin sustenance shall remain key monitorables," it said.
It expects net profit at Rs 16,616.2 crore (down 8.5 per cent Y-o-Y/up 0.6 per cent Q-o-Q). NII, meanwhile, is seen at Rs 29,213.6 crore (up 1 per cent Y-o-Y/0.5 per cent Q-o-Q).