HDFC Bank Q2 results preview: Lender may post up to 17% growth in net profit

Private lender HDFC Bank is likely to report up to 17 per cent year-on-year (YoY) growth in net profit on Saturday for the quarter ended September 30 on hopes of likely increase in Covid-led provisions.

The bank on October 5 informed bourses that its advances in the September quarter grew 15.60 per cent and deposits witnessed a growth of 20 per cent YoY. Similarly, the current account savings account (CASA) ratio of the bank increased 270 basis points year-on-year to 42 per cent in Q2FY21.

Brokerage IIFL Securities believes that the asset quality of HDFC Bank is likely to remain stable QoQ with gross non-performing assets at 1.40 per cent. However, it expects 17 per cent, 15 per cent and 18 per cent YoY growth in net profit, pre-provision profit (PPP) and net interest income (NII), respectively.

“Loan growth stood lower at 15.6 per cent YoY against 20.9 per cent in 1QFY21,” IIFL Securities said.

Shares of HDFC Bank had gained just 1.2 per cent during July-September, while the benchmark BSE Sensex advanced 9 per cent during the same period.

YES Securities believes that the bank may post 7 per cent YoY rise in profit on 16 per cent growth in NII. “Fall in loan-to-deposit ratio and surplus liquidity will pressurise net interest margin. Credit cost will remain elevated on the accelerated provision on upfront slippages and addition to Covid provision coverage,” YES Securities said.

Earlier, the lender had posted a 19.58 per cent YoY growth in net profit at Rs 6,658.62 crore for the quarter ended June 30.

An assessment by Phillip Capital showed that the bank may report 7.60 per cent and 18.20 per cent rise in bottom line and NII, respectively. “Stable asset quality and credit cost will continue to aid profitability. Credit growth continues to remain strong at 15.60 per cent amid system-wide credit growth of 6 per cent,” the brokerage said, adding that the pre-provision profit may rise 12.50 per cent YoY.