HDFC Bank Q2 Results Preview: Net profit likely to rise 3%, NII growth seen at 10% YoY; asset quality to remain stable

HDFC Bank Q2 Results Preview: HDFC Bank, the largest private sector lender in India, will announce its financial results for the second quarter of FY25 on Saturday, October 19. HDFC Bank’s merger with its parent HDFC led to inherited high-cost deposits, which the bank is systematically replacing with lower-cost options.

While the profitability of HDFC Bank is anticipated to remain steady, net interest margin (NIM) is expected to recover gradually.

Here’s what to expect from HDFC Bank Q2 results 2024:

Net Interest Income

HDFC Bank is expected to report net interest income (NII), or the difference between interest earned and interest paid, of ₹30,133 crore in the quarter ended September 2024, registering a growth of 10% from ₹27,385 crore in the year-ago quarter, according a poll of five brokerages by Livemint.

The bank’s NII is projected to grow by 1% from ₹29,837 crore in the June quarter.

“NII growth is estimated to be in-line with average loan growth as the rise in yield on advances to be in tandem with rise in cost of deposits. Consequently, net interest margin (NIM) will be stable sequentially,” Yes Securities said.

Analysts expect net interest margin to remain stable sequentially with a slight positive bias.

Profit

Net profit of HDFC Bank in Q2FY25 is expected to rise 2.73% to ₹16,413 crore from ₹15,977 crore, year-on-year (YoY).

Pre-provision operating profit (PPOP) during the quarter is likely to grow 7.76% to ₹24,455 crore from ₹22,694 crore, YoY.

Asset Quality and Provisions

Asset quality is expected to remain broadly stable, with Gross Non-Performing Assets (GNPAs) and Net NPAs projected at 1.3% and 0.4%, respectively.

Operating expenses (Opex) growth is anticipated to marginally trail behind business growth. Slippages are likely to remain steady, and provisions are expected to remain flat on a sequential basis.

Motilal Oswal forecasts that HDFC Bank's cost ratios will remain well-managed, with margins remaining stable and showing a slight positive bias. The bank is projected to achieve a 13.7% YoY growth in deposits, accompanied by a 7.9% YoY loan growth.

Going ahead, analysts expect guidance for business growth and earnings trajectory to be the key monitorables. Moreover, HDFC Bank’s management commentary on Deposit accretion and resultant credit growth and margin improvement trajectory hereon will be watched out for in HDFC Bank Q2 results.

“I expect HDFC Bank’s Q2 results to be favourable, driven by an increase in its anticipated increase in net profit. Based on the previous quarter, I anticipate the bank’s net profit for Q2 FY 2024-25 to fall within the range of Rs. 19,680 crore to Rs. 20,150 crore. The bank's NII growth could also align with its average loan growth, supported by increased yields on advances and deposit costs. Based on my analysis, I expect its net interest margin to remain stable with a positive bias. It could record approximately 13.7% y-o-y growth in deposits and 7.9% y-o-y growth in loans. Following a decent earnings report, our focus should shift to the bank's business growth and earnings trajectory,” said VLA Ambala, a SEBI-registered Research Analyst.

HDFC Bank Stock Price

On the outlook of HDFC Bank share price, Sumeet Bagadia, Executive Director at Choice Broking, said, “HDFC Bank share price is currently trading at ₹1,681.85 and has recently shown an upward momentum following a period of consolidation. After reaching highs near ₹1,788 in early September, the stock saw a pullback but appears to be regaining strength, trading above key support levels and moving averages. The stock recently dipped to ₹1,613 but has found support near this level and is now rebounding, signalling renewed buying interest. With the price trading above key Exponential Moving Averages (EMAs) — including the 50-day, 100-day, and 200-day EMAs — the technical trend remains bullish.”

“Recent trading sessions have shown a pickup in volume, indicating strong buying interest. The surge in volume following the pullback suggests confidence in further price rises. Immediate resistance is observed near ₹1,700, which, if breached, could lead to the next target around ₹1,750 to ₹1,780. On the downside, the stock finds support at ₹1,634, indicated by the 100-day EMA. A breakdown below this could lead to a retest of the ₹1,604.71 level (200-day EMA),” Bagadia added.

On Friday, HDFC Bank shares ended 0.47% higher at ₹1,681.15 apiece on the BSE. 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.