HDFC Bank is set to announce its Q2FY24 results on Monday after market hours, following its merger with Housing Development Finance Corporation (HDFC). The bank expects an increase in net profit and net interest income (NII) despite predicting a sharp contraction in margins due to the merger.
The bank has reported a year-on-year growth of 57.7% in gross advances to ₹23.54 lakh crore and a deposit growth of around 29.9% to ₹21.73 lakh crore in Q2FY24. Analysts are forecasting a net profit growth of 39.4% YoY to ₹14,780 crore and a NII increase of 33.6% YoY to ₹28,090 crore.
Furthermore, they anticipate an improvement in Gross NPAs by 6 basis points on a quarter-on-quarter basis to 1.34%, with provisions expected to remain flat. The operating profit is projected to rise by 31% YoY to ₹22,790 crore. Post-merger asset quality is also expected to improve as loan growth normalizes.
Analysts predict muted core earnings growth for FY24E at 3.5% YoY, while core PAT may witness a compound annual growth rate of 20.7% over FY24-26E.
Despite these positive projections, HDFC Bank's share price has seen a drop of over 5% year-to-date and more than 6% in the past month, closing at ₹1,536.75 on Friday.
The creation of excess liquidity due to the merger could impact the second quarter's net interest margin (NIM) but is expected to rebound in H2FY24 as credit growth accelerates and liquidity is utilized.
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