HDFC Bank Q4 Results Preview: PAT likely to surge 31% with stable margin, asset quality

HDFC Bank Q4 FY24 Results Preview: HDFC Bank, the country's largest lender by market value, is all set to report its financial results for the January-March period on Saturday, April 20. Analysts expect the private sector bank to stage a strong overall financial performance for the final three months of the previous financial year, with stable margins and slightly better steady asset quality. 

According to Zee Business research, HDFC Bank is likely to register a standalone net profit of Rs 15,800 crore for the March quarter, which translates into a jump of 31.2 per cent compared with the corresponding period a year ago. The analysts estimate the lender's quarterly net interest income (NII), or the difference between interest earned and interest paid, at Rs 29,300 crore, up 25.5 per cent on a year-on-year basis. 

Analysts at Axis Securities estimate HDFC Bank's quarterly pre-provision operating profit (PPoP) to increase 31 per cent on a year-on-year basis to Rs 24,393 crore. A crucial financial metric for businesses, PPoP reflects a lender's operational performance before factoring in loan loss provisions. By excluding provisions for potential loan losses, PPoP offers a clearer view of the company's core profitability.  

Axis Securities pegs HDFC Bank's fourth-quarter net profit at Rs 15,755 crore, up 30.8 per cent compared with the year-ago period. According to the brokerage, the management commentary on business growth, and the margin improvement trajectory will be the key monitorables in the upcoming HDFC Bank earnings report. 

Besides HDFC Bank, the brokerage expects ICICI Bank and SBI to stage positive financial performances.

HDFC Bank Q4 net interest margin (NIM)

HDFC Bank's net interest margin (NIM), a key measure of profitability for a financial institution, is estimated to remain unchanged on a year-on-year basis, at 3.4 per cent. 

HDFC Bank asset quality

Zee Business analysts expect HDFC Bank's asset quality to largely remain stable, with its gross non-performing assets (GNPAs) as a percentage of total loans at 1.2 per cent in the fourth quarter, as against 1.26 per cent in the previous three months.

They estimate its net non-performing assets (NNPAs) at 0.3 per cent in the March quarter as against 0.31 per cent in the fiscal third quarter. 

HDFC Bank Q4 business update

According to a quarterly business update by the lender earlier this month, deposits at HDFC Bank increased 7.5 per cent sequentially to Rs 23.8 lakh crore, as of March 31. 

Its gross loans increased 1.6 per cent on a quarter-on-quarter basis to Rs 25.08 lakh crore while CASA ratio improved to 38.2 per cent from 37.7 per cent. 

Overall Q4 season for banking space

Analysts expect the banking sector to witness mid-single-digit percentage growth in NII and margin compression owing to the elevated cost of funds, though they expect some improvement on the asset quality front. Read more on what to expect from banks in Q4

HDFC Bank shares: Past performance

HDFC Bank shares finished the March quarter 15.3 per cent weaker, underperforming a 2.7 per cent rise and a 2.4 per cent fall in the Nifty50 and Nifty Bank indices, respectively. 

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