HDFC Q1 PAT seen up 18% to Rs 999 cr

Net interest income is likely to spike 28% to Rs 1,274 crore in the first quarter of financial year 2012-13 as against Rs 998 crore in a year ago period.

Steady Earnings

Net interest income growth helped by healthy 19-20% growth in loans and a 19-20% growth in disbursements

In fourth quarter of FY12, net interest income rose 29% YoY to Rs 1,681 crore

Analysts on average expect spreads around 2.27%

Net interest margins are likely to be steady around 4.2% to 4.3%. Loan re-pricing of teaser loans should help margins. Year-on-year margins will be higher, but QoQ the margins should look lower because typically Q4 sees the highest margins.

Net interest margin stood at 4.4% and 3.3% in the fourth quarter and first quarter of previous financial year, respectively.

Analysts expect a steady loan growth of 18% to 20% to continue. In the previous quarter, loan book grew by 20% to Rs 1.4 lakh crore. Approvals increased by 20% and disbursements went up by 18%.

Watch out for lower non-interest income due to lower fee income + sale from investments (Rs 20 crore) and lower dividend income as the HDFC Bank dividend will accrue in Q2 only.

In Q4 FY12, fee income declined 23% to Rs 60 crore and sale from investments went down by 40% to Rs 79 crore. Dividend rose by 7% to Rs 62 crore.

Asset quality will continue to be healthy

In the fourth quarter of previous financial year, gross non-performing assets (NPA) fell 3 basis points to 0.74%

Profit growth might be restricted to 17 to 18% due to lower dividend and treasury income