HDFC Bank, India’s largest private sector lender, is on the brink of unveiling its Q3 results on January 16. Despite a year of underperformance in comparison to benchmark indices, the bank’s share price has shown resilience, gaining over 9% in the past three months and a modest 5.5% in one year. This stands in contrast to Nifty 50’s 12% rally in three months and a remarkable 23% surge in one year. As anticipation looms, let’s delve into the live updates surrounding HDFC Bank’s Q3 performance.
16 Jan 2024, 01:16:22 PM IST
Sequential Loan Growth and NII Expectations:
The latest updates suggest that HDFC Bank’s sequential loan growth is projected to hover around 4%, reflecting its unique growth trajectory. The net interest income (NII) is anticipated to exhibit muted year-on-year (YoY) growth, aligning with the average loan growth. This phenomenon is attributed to the rise in the cost of deposits outpacing the yield on advances, offset by liquidity unwind. Consequently, net interest margin (NIM) is expected to remain stable sequentially. The growth in fee income is predicted to slightly surpass loan growth, linked to payments activity. Operational expenses are anticipated to lag slightly behind loan growth. Stability in slippages on a sequential basis is expected, with provisions also maintaining stability due to idiosyncratic aspects, according to Yes Securities.
16 Jan 2024, 01:00:13 PM IST
Selling Pressure on HDFC Bank Shares:
Ahead of the Q3 results announcement, HDFC Bank’s share price witnessed selling pressure, trading lower at ₹[current value] on the BSE. The intraday trading range saw the stock reaching a low of ₹1,658.05 and a high of ₹1,680.20 on the BSE.
16 Jan 2024, 12:46:13 PM IST
Projections for Net Profit, PPoP, and More:
Analysts estimate HDFC Bank’s net profit to experience a marginal 0.2% YoY rise, reaching ₹15,027 crore in the quarter ending December 2023. Pre-provision operating profit (PPoP) is expected to witness a robust YoY growth of over 28%, reaching ₹29,372 crore. Net interest income (NII) is projected to grow by 3% YoY to ₹28,663 crore, with net interest margin (NIM) facing a slight YoY dip of 50 basis points to 3.74%, as per Prabhudas Lilladher.
16 Jan 2024, 12:30:37 PM IST
Loan Growth and Expectations for QoQ Improvement:
Q3 results are anticipated to reveal a 5% quarter-on-quarter (QoQ) growth in loans, primarily led by retail and CRB portfolio. Net interest income (NII) is likely to grow by 4.7%, supported by better yields and a slight fall in funding costs. This could translate to an improvement of 8 basis points in net interest margin (NIM). Pre-provision operating profit (PPoP) is expected to surge by 29% QoQ, attributed to potential gains from the Credila stake sale in Q3FY24. Gross non-performing assets (GNPAs) may see a slight improvement by 3 basis points QoQ to 1.31%, while provisions are expected to see a marginal increase, as per Prabhudas Lilladher.
16 Jan 2024, 12:09:58 PM IST
Outlook for Core Earnings Growth in FY24:
While HDFC Bank’s net interest margin (NIM) faced challenges in Q2FY24 due to the creation of excess liquidity, analysts project a rebound in H2FY24E as credit growth picks up and liquidity is utilized. Despite expectations of muted core earnings growth for FY24E at 6.3% YoY, core PAT may witness an 18.3% CAGR over FY24-26E as NIM and loan growth normalize. With a core Return on Assets (RoA) projected at 1.74% for FY26E, Prabhudas Lilladher maintains a ‘Buy’ rating with a target price of ₹2,025 per share.
16 Jan 2024, 11:56:10 AM IST
Phillip Capital’s Estimates for Q3:
Phillip Capital’s projections indicate that HDFC Bank’s net profit for Q3FY24 is expected to witness a 0.9% YoY rise, reaching ₹16,100 crore. Meanwhile, net interest income (NII) is likely to experience a marginal YoY dip of 0.4% to ₹27,716.4 crore. The net interest margin (NIM) is estimated to drop by 42 basis points to 3.32% YoY. As investors await the official announcement, the market’s response to these projections will undoubtedly play a crucial role in shaping the narrative around HDFC Bank’s Q3 performance.
Stay tuned for live updates as HDFC Bank’s Q3 results unfold, providing insights into the financial landscape and market dynamics.