HDFC Bank Q4FY22 Results Preview: Private lender may report up to 38% YoY growth in profit, asset quality to improve

India’s largest private lender HDFC Bank is scheduled to report robust earnings in the fourth quarter of the financial year 2021-22 (Q4FY22) on Saturday. The bank’s profit may grow up to 38 per cent year-on-year, while its asset quality likely to improve, several brokerages pointed out in its preview.

According to YES Securities, HDFC Bank’s profit may surge by 38 per cent to Rs 1129.81 crore YoY, while net interest income (NII) may grow by almost 15 per cent YoY to Rs 1963.68 crore.

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“Slippages should decline sequentially due to underlying factors. Net interest margin should be slightly lower on a sequential basis due to wholesale lending generally outpacing retail lending. Fee income would only be slightly higher due to sluggish card fees. Treasury profit would be subdued due to a rise in bond yields. Provisions would be lower sequentially,” YES Securities said in its report.

Similarly, Nirmal Bang, another brokerage, sees over 32 per cent growth in profit to Rs 1084.94 crore YoY, while expects NII may surge by 15.6 per cent to Rs 1978.65 crore YoY in Q4FY22.

“We expect large caps banks to continue to report higher growth (18.5 per cent YoY) vis-à-vis mid/small-cap peers (10.1 per cent YoY) and PSBs (8.6% YoY). Provisional numbers show that HDFC Bank has outpaced mid/small cap peers,” the brokerage said in its report.

Meanwhile, Kotak Institutional Equities also estimate that HDFC Bank’s profit may surge by around 28 per cent YoY to Rs 1047.82 crore, and NII up by 16 per cent to Rs 1977.69 crore in Q4FY22.

The brokerage sees that banks are becoming increasingly comfortable with underwriting, with the frontline private banks outgrowing others, and believe that the frontline banks will continue to deliver better credit growth given their customer mix and advantage on cost of funds.

HDFC Bank delivered 21 per cent YoY loan growth (9 per cent quarter-on-quarter) and in Retail segment, it grew around 15 per cent YoY (5 per cent QoQ), commercial/rural by 31 per cent YoY (10 per cent QoQ), and wholesale by around 18 per cent YoY (12 per cent QoQ), Kotak Institutional said.

Expecting strong Q4FY22 performance by HDFC Bank, Axis Securities said in a report, “NII to be supported by healthy loan growth; NIMs to remain stable QoQ; Fee income likely to improve, however lower treasury income to drag non-interest income, the controlled cost to support operating profit growth; slippages to moderate QoQ and asset quality to improve.”