HDFC Bank Q2 Results preview: Net profit growth may see marginal increase this quarter

HDFC Bank is set to declare its second quarter earnings for FY25 in the next few hours on Saturday, October 19th. Analysts are estimating the bank's Profit After Tax (PAT) to reach Rs 16,267.6 crore, which reflects a 1.9% growth compared to the previous year's figure of Rs 15,976.1 crore. The bank is also expected to announce a Net Interest Income (NII) of Rs 30,097.2 crore, marking a 9.9% increase from Rs 27,385.2 crore reported last year, as per a CNBC TV18 survey.

HDFC Bank is anticipated to report a net profit in the range of Rs 15,900 to Rs 16,450 crore for Q2FY25. The net interest income (NII) is expected to grow by 9-13% YoY, with NII showing flat to slightly positive growth compared to the previous quarter. Market experts predict the NII to fall within Rs 29,810 crore to Rs 31,111.2 crore for the quarter.

HDFC Bank's asset quality is expected to improve slightly in Q2FY25, with gross non-performing assets (GNPAs) likely to decrease compared to the previous quarter. However, provisions are expected to increase due to ageing and prudent accounting practices. In Q1FY25, the GNPA ratio rose by 9 basis points (bps) sequentially to 1.33%, leading to a decline in asset quality.

During the quarter ending June 2024, HDFC Bank reported a Net Interest Income (NII) of Rs 29,837.1 crore, representing a 26.4% increase from the same period last year. Sequentially, NII saw a 2.6% rise, primarily driven by strong advances growth.

The bank's net profit for Q1 FY25 saw a 35% year-on-year increase to Rs 16,175 crore, supported by robust NII and lower provisions. However, there was a 2% decline compared to the previous quarter.

Market analysts anticipate HDFC Bank's net interest margins (NIM) to hold steady at around 3.71% in the September quarter, in line with the previous quarter. Management is expected to provide positive insights on margin trends in the medium term.

The lender's focus on the loan-deposit ratio (LDR) has led to improvements compared to the previous quarter. The LDR is projected to reach around 100% from 103% in Q1FY25.

According to the pre-quarter update, there was a 1.3% sequential loan growth and a 5.1% deposit growth.

It is anticipated that loan growth will continue to be modest in the next quarter, while deposit growth is expected to surpass loan growth, consequently reducing the LDR levels further.

During the quarter ending in June 2024 (Q1FY25), HDFC Bank reported a Net Interest Income (NII) of ₹29,837.1 crore, showing a 26.4% increase from the same period last year. Sequentially, NII saw a 2.6% rise, mainly due to strong growth in advances.

The net profit for Q1 FY25 also saw a significant growth of 35% year-on-year, reaching ₹16,175 crore, supported by a healthy NII and lower provisions. However, compared to the previous quarter, net profit decreased by 2%.