Analysts’ Expectations:

Analysts estimate that HDFC Bank will report a standalone net profit of ₹11,580 crore for the April-June period, representing an impressive 25.9% jump compared to the same period last year. They also anticipate the net interest income (NII) to expand by 23.2% year-on-year to ₹24,000 crore. HDFC Bank’s strong loan growth and stable credit cost are expected to bolster its financial performance, despite potential pressure on the net interest margin (NIM) due to rising provisions.

Loan Growth and Financial Metrics:

HDFC Bank’s business update released on July 5 revealed a 15.8% year-on-year increase in gross advances, reaching ₹16,15,500 crore as of June 30, 2023. Deposits also rose by 19.2% to ₹19,13,000 crore during the same period. While the current account and savings account (CASA) deposits experienced a 10.7% increase, the CASA ratio declined from 45.8% to 42.5% year-on-year. A lower CASA ratio implies a higher cost of funds, but HDFC Bank is still expected to fare better than its peers.

Asset Quality:

HDFC Bank’s asset quality, measured by the proportion of non-performing assets (NPAs) or bad loans to total loans, is estimated to remain steady. Analysts predict gross NPAs of 1.1% for the June quarter, slightly lower than the previous three months, with net NPAs expected to remain unchanged at 0.27% sequentially.

Merger Impact and Market Performance:

HDFC Bank’s merger with HDFC Ltd, valued at $40 billion, was completed on July 1. The merged entity’s loan book with HDFC stood at approximately $274 billion at the end of the June quarter. The bank’s standalone gross advances rose by 16% to ₹16.16 lakh crore, while deposits increased by 19% to ₹19.13 lakh crore. The completion of the merger positions HDFC Bank for inclusion in the MSCI Global Standard indexes and opens new opportunities for foreign shareholding.

Stock movement:

HDFC Bank shares closed 0.27% higher at ₹1,645.60 on NSE ahead of the earnings announcement. However, the stock has shown resilience this year, with a year-to-date increase of about 22.12%.

Conclusion:

With the eagerly awaited Q1 results, HDFC Bank is expected to demonstrate strong loan growth and reap the benefits of its merger with HDFC Ltd. The bank’s financial performance, asset quality, and market response will provide valuable insights into the success of the merger and the bank’s position in the industry. As investors and stakeholders eagerly await the results, all eyes are on HDFC Bank’s performance and its ability to capitalize on its expanded capabilities in the post-merger landscape.

Updated: 16 Jul 2023, 09:16 PM IST