Q1FY23 Preview: HDFC Bank: Net Interest Income seen at Rs195 billion, PAT at Rs92 billion

15 Jul 2022 , 11:54 AM

Result date: 16^th July, 2022
Recommendation: Buy
Target price: Rs1,800

Country’s largest private bank, HDFC Bank is all set to report its performance for the quarter ending June 30, 2022.

The bank reported a sequential growth of 1.9% in its loans, lagging behind industry growth. This is largely due to muted growth of wholesale loans. Over the year-ago quarter, its loans grew 21.6%. Deposits grew 19.3% over the year-ago quarter and 3% sequentially. However, the bank’s CASA (current account savings account) ratio declined to 45.8%, down 240 basis points sequentially.

Net interest margin could benefit from higher growth of retail/CRB segment, though weakness in CASA ratio will offset the same. Asset quality is likely to remain stable during the quarter.

Provisions are estimated to decrease 17% over the year-ago quarter, but could surge 21% over the quarter ending March 31, 2022. Profit After Tax (PAT) could come in at Rs92 billion, up 18% over the year-ago quarter, but down 9% on a sequential basis.

Important management insights to watch out for:

• Updates on the merger with HDFC
• Trends in loan growth, asset quality

(Rs billion)	June 2022 estimates	YoY change	QoQ change
Net Interest Income	195.3	15%	3%
Total Income	261.9	12%	(1)%
Pre Provisioning Op. Profit	162.4	7%	(1)%
Profit After Tax	91.5	18%	(9)%

Source: IIFL Research