INSUBCONTINENT EXCLUSIVE:
NEW DELHI: In its recent quarterly update, HDFC Bank reported a strong 21 per cent year-on-year growth in advances at Rs 9.93 lakh crore as
of March 31, and 24 per cent jump in deposits at Rs 11.46 lakh crore
Analysts said the private lender may report a marginal in rise non-performing assets and stable NIMs when it announces its March quarter
earnings later in the day.
Cost of borrowing for the bank is not expected to rise drastically, they said, adding that top and bottom line
growth will stay in double digits
That said, investors will seek better clarity on these five key monitorables:
Covid-19 provisions: Analysts said the bank might have
increased provisioning for the quarter in anticipation of defaults
for the quarter to be lower than consensus estimates
Sharekhan said it expects the bank to build a contingent provision buffer for FY21
NIMs are expected to be stable, given the bank was already sitting on excess liquidity, Investec said.
Impact of RBI moratorium: The bank
may continue to add to market share gains, given the strong 24 per cent YoY loan growth, but the management commentary on the impact of RBI
moratorium will be keenly watched, said BoB Capital Markets
On March 27, the apex bank asked all lending institutions, including banks and housing finance companies, to give their borrowers a
three-month moratorium on term loans
The moratorium was for payment of all instalments falling due between March 1, 2020 and May 31, 2020.
Slippages in auto, unsecured retail
loans: ICICI Securities expects gross non-performing assets (NPAs) of the bank to up by 6-8 bps QoQ
selection of a new CEO is under way and reports suggest three contenders have been chosen for the post, namely Sashidhar Jagdishan, Kaizad
Aditya Puri will retire from the post in October
Any update on the matter would be welcome
HDFC Bank has strong retail and risk management DNA, which will remain unchanged and thus we do not expect any disruption due to management
"Growth in credit costs, especially from rural loans, would be a key monitorable
The bank is likely to build contingent provisions for any slippage due to lockdown
ICICI Securities expects credit cost, including contingent provisions, to rise marginally by 30 basis points of advances for the
quarter.
Emkay Global noted that the bank is sitting on excess liquidity led by strong deposit growth, a stance that the bank has adopted
since 2018 -- which was then criticized -- as it believes that systemic liquidity risks still remain high.
WHAT YOU SHOULD EXPECT FROM Q4
NUMBERSICICI direct projects 28 per cent year-on-year (YoY) expansion in net profit for the bank at Rs 7,568 crore and 13 per cent rise in
net interest income at Rs 14,788 crore.
Nirmal Bang Securities projected 12.80 per cent YoY increase in net interest income, 23 per cent
growth in pre-provision profit and 29.40 per cent rise in net profit for the quarter.
Kotak Institutional Equities sees 14.60 per cent rise
in NII, 17.20 per cent in pre-provision profit (PPP) and 21.10 per cent PAT expansion for HDFC Bank in March quarter.