Asset quality is likely to be stable in September quarter compared to June quarter with moderation in slippages.
HDFC Bank is expected to report more than 20 percent growth year-on-year (YoY) in the September quarter showing a profit with stable asset quality, brokerages said.
Lower tax cost after the recent corporate tax rate cut, higher other income and healthy pre-provision operating profit may boost earnings for the country's second-largest private sector lender.
The stock gained 16 percent year-to-date and 0.33 percent during the quarter ended September 2019.
"Earnings should be in the range of 20-21 percent YoY. Revised lower tax rate and post-deferred tax asset (DTA) impact will likely be used for higher contingency provisions given the emerging stress in the sector," Prabhudas Lilladher said.
Net interest income, the difference between interest earned and interest expended, is likely to grow more than 16 percent with loan growth of around 16-19 percent YoY and stable margin at 4.3 percent for the quarter ended September 2019.
Kotak expects loan growth to slow down to around 16 percent YoY resulting in slower net interest income (NII) growth at around 19 percent YoY.
"The retail loan growth slowdown is on account of weak volume growth in auto and a more cautious approach towards unsecured loans. Fee income growth from MFs will be slower YoY due to changes in regulations even as asset and payment fees will grow at a slower rate," it said.
Asset quality is likely to be stable in the September quarter compared to the June quarter with moderation in slippages.
"Asset quality trend will likely remain benign (Agri slippages will be lower this quarter)," said Edelweiss which expects profit growth at 26 percent and Pre-provision operating profit (PPOP) at 18.1 percent YoY.
Kotak said growth in credit costs, especially from rural loans, would be a key monitorable. The bank is likely to make higher contingent provisions as there is a positive impact of the lower tax rate, it added.Exposure to recently added housing finance company, loan growth, Current Account Savings Account (CASA) growth and non-performing loans (NPLs) from the retail book will be key things to watch out for.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.