HDFC Bank, the country’s second largest private sector lender, is expected to continue to report stable earnings for October-December quarter. Profit is seen rising 20 percent for the 10th consecutive quarter, to Rs 3,350 crore in Q3 compared to Rs 2,794 crore year-ago period, according to analysts polled by CNBC-TV18. Earnings will be announced on January 25.
Net interest income, the difference between interest earned and interest expended, may increase 21.3 percent to Rs 6,911 crore from Rs 5,700 crore on annual basis.
Analysts expect fee income to grow 15-20 percent, aiding profitability. Fee income was 70 percent of other income and was up 21 percent in Q2 year-on-year.
The bank after Q2 earnings said it expects net interest margin around 4.1 percent to 4.4 percent. In Q2, NIM was down 10 bps Q-o-Q to 4.2 percent due to 35-bp base rate hike impact taken August-end. NIM fell 20 bps since March when Q4FY15 NIM was 4.4 percent.
HDFC cut base rates by 70 bps since April to 9.30 percent.
Analysts feel advances may continue being above industry level due to retail business. Advances grew by 28 percent Y-o-Y in Q2 with retail up 29 percent.
They expect gross non-performing loans to remain stable, which was 0.91 percent as of Q2FY16.
Key factors to watch out for would be sale of loans to asset reconstruction companies, operating expenses and commentary on retail portfolio especially on commercial vehicle/commercial equipment.
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