HDFC Bank is expected to continue its healthy earnings growth in the quarter ended June, which will be announced on July 21. Profit is estimated to grow 21 percent year-on-year to Rs 2,699 crore in Q1FY16, according to the average of estimates of analysts polled by CNBC-TV18.
Net interest income, the difference between interest earned and interest expended, may also increase by 21 percent to Rs 6,254 crore from Rs 5,171.6 crore during the same period. Other income needs to be closely watched as in Q4FY15, that rose 28.1 percent to Rs 2,563.76 crore but in Q1FY15, that dropped 4 percent to Rs 1,850.6 crore.
Provisions should be keenly watched, said analysts, because in Q4FY15 provisions shot up 102 percent Y-o-Y (up 3 percent Q-o-Q) to Rs 576.6 crore.
They expect asset quality ratios to be largely maintained and advances growth to continue being steady (that was 20.6 percent in Q4FY15).
The country's second largest private sector lender has 47.3 percent retail book and 52.7 percent wholesale corporate book at the end of FY15. Retail portion contributed by auto (22 percent), commercial vehicle & commercial equipment (7 percent), personal loans (15 percent) and business banking (11 percent).
Sale of loans or recoveries should be watched out for to maintain gross non-performing loans (that was down 10 basis points sequentially to 0.9 percent). In Q4FY15, the bank saw a spike in slippages to 1.9 percent due to one non-performing asset (Essar Steel) with gross book value of Rs 550 crore that was sold to asset reconstruction companies.
Analysts do not expect major restructuring. At the end of Q4FY15, restructured book was steady at 0.1 percent of loans.
Net interest margin may be stable as pressure from base rate cut may be mitigated by recent fund raising, said analysts. HDFC Bank cut base rates by a total 30 basis points to 9.7 percent since April and raised raised Rs 9,840 crore in Febrary 2015.
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