HDFC Bank share price falls ahead of Q2 results today; here’s what to expect
- HDFC Bank’s net profit in Q2FY24 is expected to grow along with the net interest income (NII). However, the lender is expected to be hurt by sharp margin contraction post the merger.
HDFC Bank share price traded lower on Monday ahead of the announcement of September quarter results. HDFC Bank, the largest private sector lender in the country, is set to announce its earnings for the second quarter of FY24 today, 16 October, 2023.
HDFC Bank shares opened at ₹1,536.70 apiece on the BSE as compared to Friday’s close of ₹1,536.75. However, the stock witnessed selling pressure and was trading over half a percent lower.
At 9:50 am, HDFC Bank shares traded 0.60% lower at ₹1,527.50 apiece on the BSE.
This will be the first quarterly financial result of HDFC Bank after it was merged with mortgage lender Housing Development Finance Corporation (HDFC) effective July 1.
HDFC Bank’s net profit in Q2FY24 is expected to grow along with the net interest income (NII). However, the lender is expected to be hurt by sharp margin contraction post the merger.
The creation of excess liquidity could affect the net interest margin of HDFC Bank in Q2FY24. However, margins should bounce back in H2FY24 as credit growth picks up and liquidity is utilized, analysts said.
In its quarterly business update, HDFC Bank reported a robust 57.7% growth in its gross advances at ₹23.54 lakh crore as of September 30, 2023, rising from ₹14.93 lakh crore last year.
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Its deposits aggregated to approximately ₹21.73 lakh crore in Q2FY24, a growth of around 29.9% over ₹16.73 lakh crore as of September 30, 2022.
Motilal Oswal Financial Services expects HDFC Bank’s margins to moderate sequentially and loan growth to remain in check. Asset quality for the merged entity is expected to increase, while margins are likely to moderate sequentially.
The brokerage expects HDFC Bank’s net profit to grow 39.4% YoY to ₹14,780 crore, while NII to rise 33.6% YoY to ₹28,090 crore.
The bank is expected to post operating profit of ₹22,790 crore, up 31%, YoY.
Also Read: HDFC Bank Q2 Results Preview: Margin contraction seen after merger; here’s what to expect
According to analysts at Prabhudas Lilladher, Gross NPAs could see an improvement of 6 bps QoQ to 1.34% while they expect provisions to remain flat.
“Creation of excess liquidity could affect Q2FY24 NIM, although margins should bounce back in H2FY24E as credit growth picks up and liquidity is utilized. While core earnings growth would be muted for FY24E (3.5% YoY), as NIM and loan growth normalize core PAT may witness a 20.7% CAGR over FY24-26E,” Prabhudas Lilladher said.
HDFC Bank share price has fallen over 5% year-to-date (YTD) and is down more than 6% in the last one month.
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