India’s largest private lender HDFC Bank is expected to report a double-digit net profit growth for the fiscal fourth quarter January-March 2023, with brokerage estimates going as high as 21.7 per cent. HDFC Bank had recorded a net profit of Rs 12,698 crore for Q3 FY23. HDFC Bank will announce its March quarter results on April 15 at around 12:15 pm, followed by a press conference.
According to a few brokerage analysts, HDFC Bank’s net interest income (NII) is expected to grow in double-digits, in the range of 18.1-26.4 per cent, supported by healthy loan growth and stable margins. “We expect NII growth at ~18 per cent yoy led by loan growth of ~18 per cent on-year (bank has already reported headline business performance). We expect NIM to be stable on-quarter. The growth is balanced across segments,” said Kotak Institutional Equities.
Brokerage Estimates for HDFC Bank Q4 FY23 financial results (on-year comparisons)
Axis Securities
NII: Rs 23,854 crore; up 26.4%
Net profit: Rs 12,238 crore; up 21.7%
Non-interest income: Rs 8,857 crore; up 16.0%
Kotak Institutional Equities
NII: Rs 222,904 million; up 18.1%
PAT: Rs 118,706 million; up 18.1%
Fee income: Rs 63,246 million; up 12.3%
Treasury income: Rs 3,034 million
ICICI Securities
NII: Rs 22985.9 crore; up 21.8%
PPP: Rs 19335.8 crore; up 18.2%
NP: Rs 11981.0 crore; up 19.2%
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Sharekhan
NII: Rs 22,981 crore; up 21.8%
PPoP: Rs 18,786 crore; up 14.8%
PAT: Rs 11,905 crore; up 18.4%
Asset quality improvement, driven by moderate slippages, healthy recoveries
Asset quality is also expected to remain stable and may improve further due to moderation in slippages, healthy recoveries and better collection efficiencies. “Asset quality to be stable with slippages in control. GNPA ratio is seen at 1.21 per cent and NNPA at 0.32 per cent. Expect provision to be elevated at Rs 3361 crore building in merger buffers. PAT is expected to grow 19 per cent on-year to Rs 11981 crore with a mild decline of 2 per cent sequentially,” said ICICI Securities. It expects margin to remain stable at 4.1 per cent.
Overall, brokerage firms maintained that the banking sector will show strong systemic credit growth, thereby “delivering a robust ~17 per cent on-year credit growth” in the quarter ended March 31, 2023. “In terms of asset quality, we believe Q4FY23 will be another uneventful quarter with healthy recoveries and moderating slippages driving asset quality improvement,” said Axis Securities. Supported by stable NIMs and muted credit costs, we expect banks under our coverage to report strong earnings growth of 31 per cent on-year during Q4FY23, it added.
What to watch from HDFC Bank Q4FY23 results?
While HDFC Bank was one of the preferred picks among large private banks for brokerage firms, what will be the key things to look out for in the Q4FY23 results? According to analysts, the key monitorables will be the management commentary on retail growth, and status of the merger with HDFC Ltd.
In a regulatory filing, HDFC Bank earlier said that it will consider declaring a dividend for the financial year. “The Board will inter alia consider a proposal for recommendation of dividend on the equity shares of the Bank for the financial year ended March 31, 2023,” it said in a regulatory filing. Earlier, after RBI MPC’s surprise move to keep the repo rate unchanged, HDFC Bank cut its Marginal Cost Based Lending Rate (MCLR) for select tenors by up to 85 basis points, with effect from April 10, 2023.