HDFC Bank Q2 asset quality likely to be healthy

HDFC Bank will announce its July-September quarter (Q2FY14) results on Tuesday. Analysts on an average expect profit after tax to rise 26 percent on yearly basis to Rs 1,963 crore in the quarter gone by.

According to a CNBC-TV18 poll, net interest income (NII) of the country's second largest private sector lender may surge 23 percent year-on-year to Rs 4,576 crore in the second quarter. Also Read - IndusInd Bank Q2 beats estimates, net up 32% to Rs 330 cr What to watch out for
NII growth looks still higher than peers, but it is expected to moderate compared to June quarter. NII had risen 27 percent Y-o-Y in June quarter.
Analysts expect loan growth between 18-20 percent while deposit growth is expected to be in line with loan growth.
Margins could moderate by 10 basis points Q-o-Q but remain steady Y-o-Y, feel analysts.
According to a poll, ex-forex fee income growth is expected to be healthy at more than 15 percent Y-o-Y. However, trading income contribution is expected to be negligible in the quarter gone by.
Asset quality is likely to be healthy, but the stress in few segments of retail loans has increased. Hence any pressure in retail loan segment will be watched, say analysts.
Meanwhile, HDFC Bank increased base rates by 20 bps to 9.8 percent as against 9.6 percent effective August 3. Hence, analysts feel net interest margin is expected to be maintained or slightly declined Q-o-Q.