HDFC Bank Q3FY22 Preview: NII seen at Rs186.4 billion, PAT at Rs103.3 billion

14 Jan 2022 , 08:20 AM

Result date: 15th January 2022
Recommendation: Buy
Target price: Rs2,000

India’s largest private sector HDFC Bank is all set to start off the results season for banks. It is likely to post a good performance on all three key parameters — growth, margins and asset quality.

Its loan book has grown 16.4% YoY and 5% QoQ, amid strong traction in commercial, rural and retail loans. Deposits grew 13.8% YoY and 2.8% QoQ. Growth in CASA deposits remained strong at 24.6% YoY and 3.5% QoQ with retail leading from the front. Share of CASA in total deposits improved to 47.1% from 43% in the year-ago quarter and 46.8% in the September 2021 quarter.

Both Net Interest Income (NII) and Non-Interest Income are likely to clock in double digit growth on a YoY basis. Higher CASA ratio and enhanced loan-to-deposit ratio will rub off favorably on the bank’s margins during the quarter. Asset quality metrics are likely to improve on the back of lower slippage.

Important management insights to watch out for:

– Unsecured retail segment
– NPA, margins and recovery

Rs. Billion	December 2021 estimates	YoY change	QoQ change
Net Interest Income	186.4	14%	5%
Non-Interest Income	82.5	11%	11%
Total Income	268.9	13%	7%
Pre provisioning Op. Profit	171.2	13%	8%
Profit Before Tax	139.2	18%	17%
Profit After Tax	103.3	18%	17%

Source: IIFL Research