The bank has already shared growth figures for advances and deposits as part of its Q3 business update. While these growth trends largely met expectations, investor sentiment turned cautious after the LDR exceeded the 99% threshold. This is particularly noteworthy since the management had previously indicated a goal of reducing the ratio to below 90% over time, raising uncertainties about balance sheet flexibility and future growth prospects.
In terms of earnings, analysts predict approximately 7% year-on-year growth for both net interest income (NII) and profit after tax (PAT) for the quarter. Growth in pre-provision operating profit (PPoP) could be even more robust, nearing 9%, bolstered by contributions from the other income segment.
Net interest margins (NIMs) are expected to show modest improvement. The market anticipates a six-basis-point increase year-on-year, bringing margins to roughly 3.46%. This enhancement is primarily attributed to the recent CRR cut and ongoing deposit repricing within the banking sector.
Credit costs are projected to remain stable this quarter. Nonetheless, market participants will pay close attention to trends in agricultural loan slippages and any insights from management regarding asset quality within the agri portfolio.
Beyond the headline figures, management commentary is likely to be a crucial factor influencing the stock. The path for the LDR and details on how the bank plans to reduce it will be carefully examined, especially considering concerns about sustainable growth. Guidance on loan growth and net interest margin outlook will also be vital.
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Overall, while balance sheet concerns linger, the market is optimistic that HDFC Bank will present yet another steady set of earnings for the December quarter.
In anticipation of the results, HDFC Bank shares closed Friday’s trading session up 0.55% at ₹930.55 each. The Mumbai-based lender currently holds a market capitalisation of ₹7.12 lakh crore and has achieved returns of approximately 12.65% over the past year.
