Here's what to expect from HDFC Bank Q4 earnings

Moneycontrol Bureau

Privately held HDFC Bank's fourth quarter (January-March; FY13) net profit is likely to grow 32.6 percent year-on-year to Rs 1,926 crore. Net interest income, or the difference between interest earned and paid out, is expected to rise 17 percent YoY to Rs 3,969 crore, according to a poll estimate by CNBC Awaaz.

HDFC Bank shares have outperformed the Bank Nifty - the broader index for banking stocks by a wide margin. Since last one year, those spiked more than 30 percent as against a rise of nearly 17 percent in the benchmark index.

"There is no specific issue looming large over the bank," Vaibhav Agrawal, banking analyst, Angel Broking told moneycontrol.com.

"We need to see if there is any emerging sign of moderation in growth. So far, the bank has retained its asset quality. Any ugly surprise in credit quality will be a negative trigger. The bank is expected to maintain its net interest margin," he said.

HDFC Bank's RoA (Return on Assets) currently stands at around 1.8. This is considered to be very high. However, the market is a bit apprehensive of its sustainability.

"Growth is the only challenge for the bank. So far, it has been growing persistently. To maintain such high RoA, the lender either has to step up its balance sheet or moderate its pace of growth. Other option is that, it may go for some inorganic growth," said a banking analyst from a domestic brokerage.

During the October-December quarter, its loan book had expanded more than 24 percent YoY to Rs 2.41 lakh crore beating the average growth for the industry. Retail loans had grown about 30 percent YoY to Rs 1.30 lakh crore. The bank hinted at increasing the share of retail credit.

The management earlier mentioned of outpacing the industry credit growth, which RBI had projected at 16 percent in FY13.

Traditionally, the bank gives credit to corporates for working capital requirement. Project finance, launched more than a year back, stood around 4 percent of the loan book as on December 31, 2012. HDFC Bank is offering a base rate of 9.60 percent, the lowest in the industry.

saikat.das@network18online.com