HDFC Bank Q1 earnings preview: Robust loan growth, merger synergies drive anticipation
Housing Development Finance Corporation (HDFC). With expectations of strong loan growth and the integration benefits from the merger, HDFC Bank's Q1 results are poised to make headlines. Analysts estimate that HDFC Bank will report a standalone net profit of ₹11,580 crore for the April-June period, representing an impressive 25.9% jump compared to the same period last year.
They also anticipate the net interest income (NII) to expand by 23.2% year-on-year to ₹24,000 crore. HDFC Bank's strong loan growth and stable credit cost are expected to bolster its financial performance, despite potential pressure on the net interest margin (NIM) due to rising provisions. HDFC Bank's business update released on July 5 revealed a 15.8% year-on-year increase in gross advances, reaching ₹16,15,500 crore as of June 30, 2023.
Deposits also rose by 19.2% to ₹19,13,000 crore during the same period. While the current account and savings account (CASA) deposits experienced a 10.7% increase, the CASA ratio declined from 45.8% to 42.5% year-on-year. A lower CASA ratio implies a higher cost of funds, but HDFC Bank is still expected to fare better than its peers.
HDFC Bank's asset quality, measured by the proportion of non-performing assets (NPAs) or bad loans to total loans, is estimated to remain steady. Analysts predict gross NPAs of 1.1% for the June quarter, slightly lower than the previous three months, with net NPAs expected to remain unchanged at 0.27% sequentially. HDFC Bank's merger with HDFC Ltd, valued at $40 billion, was completed on July 1.
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