HDFC Bank Q3 Results Preview: Net interest income likely to grow by one-fourth with steady asset quality

HDFC Bank, the country’s largest private sector lender by sales as well as market value, is all set to report its financial results for the October-December period (Q3 FY24) on Tuesday, January 16. Analysts widely expect the bank to stage a strong show for the fiscal third quarter with robust growth but some pressure on margin owing to a rising cost of deposits. 

What to expect in HDFC Bank Q3 FY23 earnings

According to Zee Business research, HDFC Bank is estimated to report a standalone net profit of Rs 16,000 crore for the quarter ended December, translating into a jump of 30.5 per cent on a year-on-year basis. The analysts expect the banking behemoth to register Rs 28,700 crore in net interest income for the three-month period, up 24.8 per cent compared with the year-ago period. 

Zee Business analysts estimate HDFC Bank’s core net interest margin (NIM) for the October-December period at 3.3-3.4 per cent as against 3.56 per cent for the previous three months. 

They expect the lender to maintain its asset quality. 

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According to the research, HDFC Bank’s gross non-performing assets (NPAs), or bad loans, as a percentage of its total loans are pegged at 13 per cent for the December quarter, as against 1.34 per cent for the July-September period. 

Its net non-performing assets (NPAs) are estimated at 0.3 per cent for the fiscal third quarter, as against 0.35 per cent for the quarter ended September. 

What other analysts expect

Brokerage Axis Securities expects HDFC Bank, along with ICICI Bank and State Bank of India, to report a positive set of quarterly numbers. 

Analysts at the brokerage estimate HDFC Bank’s net profit to grow 30.2 per cent on a year-on-year basis to Rs 15,961 crore and net interest income to expand 27.8 per cent to Rs 29,379 crore. 

HDFC Bank’s margins are likely to have bottomed out in the July-September period and expected to improve sequentially, analysts at the brokerage wrote in a report dated January 9. 

HDFC Bank Q3 update

In a business update for the quarter gone by released this month, HDFC Bank said its deposits grew 27.7 per cent for the December quarter while gross advances increased 62.4 per cent to Rs 24,695 crore. 

Its domestic retail loans expanded 111 per cent annually while CASA ratio increased by 10 basis points sequentially, the bank said. 

The CASA ratio determines the proportion of deposits in a bank's low interest paying current and savings accounts in its total deposits. A higher CASA ratio indicates a lower cost of funds, and vice versa.

How HDFC Bank fared in Q2 FY24

The lender reported a 50.6 per cent year-on-year jump in standalone net profit to Rs 15,976.1 crore with growth of 30.3 per cent in net interest income to Rs 27,385.2 crore for the quarter ended September. 

The private sector bank’s core net interest margin (NIM) stood at 3.65 per cent for the July-September period as against 4.1 per cent for the previous three months. 

HDFC Bank shares: Past performance 

The HDFC Bank stock finished the December quarter 12 per cent stronger, better than headline index Nifty50’s rise of 10.7 per cent and banking gauge Nifty Bank’s 8.3 per cent.