HDFC Bank Q3 preview: Expect double-digit growth in net profit; high cost of funds to impact NIM

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₹24,69,500 crore as of December 31, 2023, registering a growth of around 62.4 per cent over ₹15,20,500 crore as of December 31, 2022. Domestic retail loans jumped 111 per cent year-on-year (YoY), and around 3 per cent quarter-on-quarter (QoQ). Commercial and rural banking loans grew by 6.5 per cent and corporate and other wholesale loans (excluding non-individual loans of the erstwhile HDFC Limited) grew by 2 per cent sequentially.

The Bank’s CASA ratio stood at around 37.7 per cent as of December 31, 2023, as compared to 44 per cent as of December 31, 2022 and 37.6 per cent as of September 30, 2023. Also Read: HDFC Bank Q3 Update: Gross advances rise 62.4% to ₹24.69 lakh crore; deposits up 27.7% YoY Shreyansh Shah, a research analyst at StoxBox expects the bank to have strong business growth due to increased branches and effective execution from the sales team, which was aided by the festive season. As per Shah's estimates, the deposits are likely to witness healthy growth in Q3FY24 due to attractive interest rates and increased mobilisation of term deposits (TDs).

However, its CASA may have a marginal impact due to increased traction in the TDs. NIMs are likely to be range-bound between 3.4 per cent and 3.6 per cent due to the high cost of funds. "We expect an improvement in profitability and return ratios due to increasing disbursements, mainly to construction finance.

As HDFC Bank has taken care of the non-retail book of erstwhile HDFC Ltd. in the previous quarter itself, we do not foresee further run down in asset quality in the current as well as upcoming quarters," said Shah. Going ahead, Shah expects the bank to have a healthy liquidity coverage ratio due to the merger effect, with return ratios aided by robust