Private sector lender HDFC Bank is expected to report a double digit growth in its net profit and net interest income (NII) on a year-on-year (YoY) basis during the fourth quarter ended March 31, 2020 (Q4FY20). The lender is scheduled to release its march quarter earnings numbers on April 18.
Brokerages broadly expect net profit in the range of 20-30 per cent during March quarter, while NII is pegged between 10-18 per cent in wake of slow loan quarter during the quarter under preview. Brokerages also opined that the bank may see marginal increase in gross non-performing assets during the quarter and it may also make some contingent provisions for FY21, which could impact earnings.
According to analyst at ICICI Securities, the bank's profit may rise 28.6 per cent YoY to Rs 7,568.2 crore, helped by robust growth in deposits and increase in fee-based income. "Traction in deposit remains robust at nearly 24 per cent YoY to Rs 11.46 lakh crore. Sequentially, steady margin at 4.2 per cent and healthy fee-based income is seen keeping pre-provision profit growth at 21.8 per cent YoY to Rs 13,206 crore," Business Standard quoted analysts at ICICI Securities as saying.
Meanwhile, analysts at Kotak Institutional Equities expects the bank to post 21 per cent YoY growth in net profit and 17 per cent in pre-provision operating profit. Loan growth is estimated to be around 20 per cent YoY, while NII growth at around 15 per cent YoY. "We expect loan growth to slow to around 20 percent YoY, resulting in lower NII growth at around 15 percent YoY. Retail loan growth slowdown is on account of weak volume growth in auto though the share of unsecured portfolio would continue to remain high (lockdown impact negligible)," the brokerage firm reportedly said.
During December quarter (Q3FY20), HDFC Bank reported a 32.8 per cent YoY growth in its net profit at Rs 7,416.5 crore. Net interest income (NII), the difference between interest earned and interest paid, was up 19.9 per cent at Rs 14,173 crore on the back of growth in advances. The bank's capital adequacy ratio (CAR) was 18.5 per cent as on December 31, 2019. The banks are required to maintain a CAR of 11.075 per cent.
On the assent front, HDFC Bank's gross non-performing assets (NPAs) were at 1.42 per cent of gross advances as on December 31, 2019, while net NPAs were marginally up at 0.48 per cent of net advances during the quarter under review. In Q3FY20, provisions and contingencies increased 37.62 per cent YoY to Rs 3,043.6 crore.
Earlier this month, the bank said that its deposits grew by 24.2 per cent at Rs 11.46 lakh crore during the January-March quarter, compared to Rs 9.23 lakh crore in the same quarter last year. On the quarter-on-quarter basis, the aggregate deposits rose by 7.41 per cent from Rs 10.67 lakh crore as of 31 December 2019. HDFC Bank's advances aggregated to Rs 9.9 lakh crore as of March 31, 2020, registering a growth of around 21 per cent as compared to Rs 8.19 crore in the year-ago period. The amount stood at Rs 9.36 lakh crore as of December 31, 2019.
Meanwhile, shares of HDFC Bank ended Friday's trade at Rs 910.40 apiece, up 3.33 per cent, on the Bombay Stock Exchange (BSE) against previous closing price of 881.05. During the day's trade, the stock hit an intra-day high and low of Rs 920.85 and Rs 920.85, respectively.