HDFC Bank Q3 Preview: Brokerages expect healthy NII growth

On the back of improving credit growth and net interest margin (NIM), brokerages are expecting India's largest private sector lender HDFC Bank to report healthy growth of around 20% in net interest income in the December quarter. The private bank is scheduled to declare its results on Saturday.

In its Q3 update, the bank's CASA ratio had dipped 1.4% QoQ, but a higher-than-expected retail loan growth at 5% YoY turned out to be a silver lining.

HDFC Bank has been strengthening its geographical footprint in terms of both reach and density, which analysts say will result in higher operating expenses growth of around 20% YoY. “As a result, operating profit is likely to grow in mid-teens. Given lower provisioning expectations, PAT growth is expected at ~20% YoY in Q3FY23,” ICICI Securities said.


Here's what top brokerages are looking for from HDFC Bank Q3 earnings:

BNP Paribas
Global brokerage firm BNP Paribas expects HDFC Bank's net interest margin (NII) to grow 19.4% YoY and profit after tax (PAT) by 11.4%.

Sharekhan
Net interest margin (NIM) is expected to improve sequentially while asset quality is expected to remain stable. Key monitorable would be any conversation on regulatory dispensations. It estimates NII to grow 22.6% YoY and PAT 16.1% YoY.

Motilal Oswal
NII is expected to grow 13% YoY and PAT 18.1%. “Expect business growth to see continuous traction. Margin expansion will be an important metric, deposit traction to be closely monitored," it said.

Axis Securities
NII to grow 21.5% YoY and net profit by 14.7% YoY. "NII to be supported by healthy loan growth; NIMs expansion likely to be led by growth in retail book," Axis said, adding that the key monitorables would be management commentary on retail growth and comments on merger progress.

ICICI Securities
NII to grow 23% and PAT 20% YoY. "Given higher advances growth and rise in lending rates, we believe margins are likely to be up ~10-15bps QoQ, even after offsetting TD rate hike," it said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)