HDFC Bank could report weak profits in September quarter due to higher tax outgo: Macquarie
HDFC Bank could report a subdued 6% growth in profits in the September quarter, Macquarie Capital said in a note on Thursday. According to Macquarie, profit after tax could grow at 6% on year at Rs 16,900 crore. The weak profit expectation is due to expectation of higher tax outgo.
«Profit seems likely to be weak mainly on account of a higher tax rate and lower treasury profits,» said Suresh Ganapathy, Head of financial services research at Macquarie Capital.
This will be the first quarter post the merger with erstwhile HDFC Corporation where on year numbers will be comparable.
According to Macquarie, for the September quarter HDFC Bank could see Rs 80,000 crore addition in deposits over the June quarter. It also expects the loan-to-deposit ratio to come down marginally. The lender has also been under pressure to reduce its loan to deposit ratio (LDR) and focus on margins. HDFC Bank's LDR from a peak of 110% has already declined to 103.5% and is expected to come down further.
The analysts expect loan growth to remain weak at 8% on year due to sell-downs and base effect. According to Macquarie the fall in loan growth is largely due to the lender’s plans to sell about Rs 70,000 crore of its loans and a base effect playing due to the merger with erstwhile HDFC Corporation.
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