HDFC Bank: Asset quality stabilisation, a key for Q4 results

Moneycontrol Bureau

India's second largest private sector lender HDFC Bank's fourth quarter (Jan-March) net profit is expected to rise 30.50% year-on-year to around Rs 1,500 crore. The bank's loan book (net) would likely to expand a little more than 22% y-o-y to around Rs 1.95 lakh crore, according to an average estimate of four brokerages. The net interest income or the difference between interest earned and paid out may grow in the range of 13-14%.
"Market will closely watch the bank's asset quality," Bhavesh Kanani, a banking analyst from Centrum broking told Moneycontrol.com.
"There is limited scope for the bank to improve its asset quality. In the last few quarters, the lender has been showing its gross non-performing asset ratio at around 1%. This quarter, we have to see whether it has been stabilized around that level. Moreover, the quality of its retail loans too needs to be clarified," he said.
Banking on its asset quality and consistent profit generations, a majority of market analysts are bullish on the bank. However, the management outlook for 2012-13 has assumed much importance especially after the Reserve Bank of India effected its first policy rate cut by 50 basis points after a gap of three years.
"The bank's net profit had risen 31% y-o-y in October-December quarter due to lower provisioning. If the lender continues with the same pace of profit, this quarter net profit may be supported by other income growth coming from their retail segment," said Abhishek Kothari, banking analyst from Violet Arch Securities.
The bank's corporate exposure is mainly in form of working capital loans. Hence, any possibility NPAs arising out of that is remote, analysts believe.
saikat.das@network18online.com