Here's what to expect from HDFC Bank's Q1 earnings

Moneycontrol Bureau

India's second largest private sector lender HDFC Bank is unlikely to spring any ugly surprise in its first quarter (April – June) earnings. Its net profit is expected to grow 30 percent year-on-year to Rs 1,890 crore, according to an average poll estimate by CNBC TV18.  The lender has managed to report a growth of 30-32 percent in its net profit level since several quarters.

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Net interest income or the difference between interest earned and paid out, is likely to rise 21 percent to Rs 4,295 crore. Loan would expand at the rate of 21 percent. During the January- March quarter, loans had expanded about 23 percent y-o-y to Rs 2.40 lakh crore. A majority of its loan book is in the form of working capital. The share of long term financing is limited.

"There is no major issue that may erode the bank's margins," Vaibhav Agrawal, banking analyst from Angel Broking told moneycontrol.com.

"The bank did not report any significant rise in bad loans. Instead of putting recovery efforts, it is applying the same in branch expansion. After the latest RBI liquidity measures, the lender will not be impacted much. It has sizable floating provisions. However, other income may grow at a slower pace," he said.

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The net interest margin may improve by 20 basis points to 4.50 percent y-o-y. The bank is expected to mop up strong deposit growth of around 22 percent y-o-y.  On credit front, asset quality is expected to remain stable.

Since last one year HDFC Bank shares rose more than 16 percent as against 6 percent rise in the Bank Nifty – the broader index for banking stocks.