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HDFC Bank likely to post steady Q4 earnings; PAT, NII may record double-digit growth YoY
- HDFC Bank has already released its balance sheets performance for Q4FY23. In this quarter, the bank garnered advances of approximately ₹16,005 billion, rising by 16.9% YoY. While deposits stood at ₹18,835 billion in Q4FY23, up by 20.8% YoY.
The next major Q4 earnings will be of the largest private sector lender HDFC Bank on Saturday. The fourth quarterly earnings are seen to be steady for the lender. HDFC Bank is expected to post double-digit growth in both net interest income (NIIs) and net profit year-on-year. While asset quality may remain stable with a further squeeze in gross NPA, however, provisions are seen to be elevated.
Ahead of Q4 results, HDFC Bank witnessed positive performance on Thursday on stock exchanges. On BSE, the stock closed at ₹1,693.30 apiece up by 0.51%.
HDFC Bank is the third largest Indian company and the largest in the banking sector in terms of market share. As of April 13, the bank's m-cap stood at nearly ₹9.45 lakh crore.
Trading will be closed on Friday due to the Ambedkar Jayanti celebration.
The private lender will be the first to announce its Q4 results in the banking sector. It will be announced on April 15.
HDFC Bank has already released its balance sheets performance for Q4FY23. In this quarter, the bank garnered advances of approximately ₹16,005 billion --- rising by 16.9% from ₹13,688 billion in the same quarter last year. While the growth stood at 6.2% from advances of ₹15,068 billion in the December 2022 quarter.
Meanwhile, the bank's deposits stood at ₹18,835 billion in Q4FY23, rising by 20.8% compared to ₹15,592 billion in Q4FY22. Also, it posted a growth of 8.7% from deposits of ₹17,332 billion in the preceding quarter.
In the preceding quarter which is December 2022 period, the bank reported a net profit of ₹12,259.50 crore up by 18.50% YoY, while its net interest income picked up by a whopping 24.60% YoY to ₹22,987.9 crore. Gross non-performing assets were at 1.23% by end of the December 2022 quarter, as against 1.26% in the same period a year ago. Net non-performing assets were at 0.33% of net advances as on December 31, 2022.
What to expect in Q4?
In its Q4 preview report, ICICI Direct on HDFC Bank said, "Expect NII growth at 21% YoY to ₹22,958 crore even though moderation is seen in credit growth to 16%. Corporate advances slowed to 12% YoY while retail advances are robust at 21% YoY. Expect margins to be stable at 4.1%. Other income to see improvement QoQ and expected to grow 17 % YoY to ₹8935 crore."
Further, the brokerage said, "Asset quality to be stable with slippages in control. GNPA ratio is seen at 1.21% and NNPA at 0.32%. Expect provision to be elevated at ₹3,361 crore building in merger buffers."
In the case of the bottom-line, ICICI Direct said, "PAT is expected to grow 19% YoY to ₹11,981 crore with the mild decline of 2% sequentially. Timelines and other merger events will be watched."
Gaurav Jani – Research Analyst, Prabhudas Lilladher expects HDFC Bank's NII growth at 32.5% YoY and 8.8% QoQ driven by strong loan growth of 6.2% QoQ, however, margin growth would be flattish.
Jani believes that the bank may continue to build in buffer provisions, which would lead to steady earnings.
Meanwhile, Emkay Global expects to expect HDFC Bank to report healthy profitability, led by healthy NII growth/contained provisions. Slippages are expected to come off on a QoQ basis due to lower stress from the agri portfolio.
BNB Paribas has given a "Buy" rating on HDFC Bank for a target price of ₹2,180. Among key risks to the price are --- are macro risks from the inflation-interest rate- GDP growth dynamic. HDFC Bank's provisioning adequacy is heavily dependent on the fact that its stressed asset numbers are the very lowest in the sector. If this were to change for any reason, the provisioning burden on RoA will be high. However, such a change is very unlikely given focus on prime assets.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Business NewsCompaniesNewsHDFC Bank likely to post steady Q4 earnings; PAT, NII may record double-digit growth YoY
First Published:13 Apr 2023, 10:56 PM IST
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