HDFC Bank trades weak ahead of Q2 numbers

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– Shares of industry leader HDFC Bank opened lower today and were trading 0.4-0.5 per cent down, ahead of the lender’s Q2 financial results, set to be declared post market hours on Monday.

HDFC Bank and Federal Bank are kick-starting the Q2 results season for the banking sector.

As per provisional numbers declared so far, HDFC Bank posted loan growth of 57.7 per cent yoy and 44.4 per cent qoq, on the back of the merger of HDFC with the bank effective July 1. Deposits were up 29.9 per cent yoy and 13.6 per cent qoq. CASA deposits were higher by 7.6 per cent on-year and 0.6 per cent on quarter. CASA ratio stood at around 37.6 per cent as of September 2023.

“While we wait for the system deposit growth data, Rs 1.1 lakh crore deposit mobilisation in 2Q, which is the first quarter post merger, clearly reflects the strength of the franchise’s distribution network,” Macquarie Research said.

On a proforma merged basis, advances were up 4.9 per cent and deposits 5.3 per cent, sequentially. The bank said home loan disbursements during the quarter were the best ever at Rs 48,000 crore, a growth of 10.5 per cent yoy and 14.0 per cent qoq.

However, analysts believe that the first-quarter results post-merger pose a risk to the accuracy of estimates, with most expecting loan growth to be contained and margins compression to continue, albeit moderately, due to excess liquidity on the balance sheet.

“HDFC Ltd continues to see a rundown of non-compliant book. Wholesale advances declined 6 per cent qoq and 20 per cent yoy. There could be some more rundowns in FY24 which coupled with IBPCs (interbank participatory certificates) could impact net advances growth,” Macquarie said.

“Gross NPA to inch up slightly, accounting for the stress in the non-individual book of HDFC Ltd,” Axis Securities said.

Motilal Oswal Securities said business growth, and management guidance on earnings and margin trajectory will be key monitorables for the reporting quarter.



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