HDFC Bank Q2 preview: Profit may jump 20%, NIM seen at 4.3%

HDFC Bank, India’s most most-valued lender, us likely to report over 20-per cent rise in September quarter profit on Saturday.

PhillipCapital expects the private lender to report net profit at Rs 6,234.5 crore, up 24.5 per cent YoY. It sees a 12 per cent growth in profit sequentially.

Net interest income (NII) is seen at Rs 13,410.8 crore, up 14 per cent year-on-year (YoY). The slippages could come in at Rs 4,500 crore, showing a rise of 37 per cent. Net interest margin (NIM) is seen at 4.3 per cent, the brokerage said.

HDFC Bank has been consistent with growth both in terms of earnings and stock performance. Due to its earnings visibility, the Street has rewarded the stock, which has jumped 16 per cent so far this year. The scrip gained 0.7 per cent on Friday to Rs 1,229.20, ahead of earnings.

Edelweiss Securities expects NII for the bank at Rs 18,498.5 crore, up 17.2 percent YoY amd 1.3 per cent, sequentially. The Pre-provision operating profit will likely be at Rs 11,197.3 crore, up 18.1 per cent YoY, it said.

Asset quality trend will likely remain benign, it said.

“Key monitorable will be the management stance in stepping up coverage further on retail book. Besides, loan growth may come in above the industry growth, implying continued market share gains. Core revenue momentum will likely improve. DTA markdown to have some impact on earnings,” said Edelweiss Securities.

The brokerage estimates the core net profit at Rs 6,323 crore, up 26 per cent YoY and 13.6 per cent QoQ.

Emkay Research also expects profit to be in excess of Rs 6,000 crore, a growth of 22 per cent YoY. It pegs NII at Rs 13,927.8 crore, up 18.4 per cent annually and 4.8 per cent sequentially.

The research house expects NIM to be constant at 4.3 per cent.

“The bank bought Rs 7,600 crore portfolio from HDFC, leading to healthy 19 YoY per cent growth. The bank will be a beneficiary of corporate tax rate cut; however, may take a hit on DTA of Rs 1,200 crore in this quarter. Agri-stress is moderating but there are some pockets of stress in the retail book,” Emkay said in a report.