HDFC may report 300% increase in Q3 profit, AUM growth expected at 14-15%
Net interest income during the quarter is likely to grow in the range of 6-12% YoY with strong retail loan growth and moderation in corporate book.
January 27, 2020 / 08:55 AM IST
Housing Development Finance Corporation (HDFC) is expected to report on January 27 around 300 percent year-on-year growth in Q3FY20 profit on the back of de-recognition of investment in GRUH Finance that merged with Bandhan Bank.
The company earlier this month in its BSE filing had said it recorded a fair value gain of Rs 9,020 crore through the statement of profit and loss after derecognition of investment in GRUH Finance. Its shareholding in Bandhan Bank will be classified as fair value through other comprehensive income, it added.
Besides the above, there was no profit on sale of investments in subsidiary or associate companies of the Corporation during the quarter ended December 2019, HDFC had said.
"The company will entail a gain of Rs 9,020 crore on the derecognition of investment of GRUH, of which, as a matter of policy (also seen earlier), the company will make one-third provisions on this windfall gains (thus provisions will be higher by Rs 3,000 crore)," said Edelweiss which expects profit to grow 298.2 percent YoY and 112.5 percent QoQ.
Net interest income during the quarter is likely to grow in the range of 6-12 percent YoY with strong retail loan growth and moderation in corporate book. Asset under management (AUM) is seen in double digit YoY for the quarter.
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Kotak Institutional Equities expects HDFC to deliver 14 percent YoY AUM growth on the back of 17 percent YoY growth in retail business (17 percent YoY in Q2FY20) even as non-individual loan book remains flat QoQ.
Net interest margin and credit cost are expected to be stable for the quarter.
"Core NIM will likely remain stable QoQ at 2.4 percent as decline in marginal cost of funds is passed on to new retail borrowers. Credit cost (excluding extraordinary provisions) will likely remain stable at about 25 bps of AUMs," said Kotak which expects profit to increase 303.4 percent YoY (up 115.3 percent QoQ) and net interest income 8.5 percent YoY.