homeearnings NewsHDFC Bank to report first quarterly results after merger, Street expects 3% fall in net profit
HDFC Bank to report first quarterly results after merger, Street expects 3% fall in net profit
HDFC Bank Q2 results: Industry experts and investors are closely eyeing HDFC Bank's performance, as it marks the debut quarterly financial disclosure for the lender since the merger.
HDFC Bank is scheduled to unveil its results for the second quarter (Q2) of financial year 2023-24 on Monday, October 16. This announcement follows the merger of HDFC Bank with Housing Development Finance Corporation (HDFC), a transformational union that became effective on July 1, 2023. According to a CNBC-TV18 poll, HDFC Bank will report a 9.8% increase in Net Interest Income (NII), reaching an estimated Rs 28,187.4 crore.
However, profit figures are anticipated to reveal a 3% year-on-year decline, potentially dipping to Rs 14,616.5 crore. In the corresponding quarter of FY23, HDFC Bank had posted a net profit of Rs 15,060 crore, with NII at Rs 25,660.4 crore.
According to brokerage firm Emkay Global, the private lender is expected to be hurt by the sharp margin contraction after the merger. "The second quarter could be a bottoming out quarter and should be a key beneficiary of margin recovery from the third quarter, which coupled with reasonable valuations among peers should drive up the stock," it said.
Here are key things to watch out for:
Post-merger unveiling
Industry experts and investors are closely eyeing HDFC Bank's performance, as it marks the debut quarterly financial disclosure for the lender since the merger. Analysts anticipate a fair degree of volatility in the numbers.
Cost of funds
Investors will scrutinise the opening cost of funds, a pivotal metric for the merged entity, as it reflects the bank's ability to acquire low-cost funding, which is vital in maintaining healthy profitability.
Yield on loans
The yield on loans, especially in the context of the merged entity, will be closely examined. This metric provides insights into the bank's ability to generate income from its lending activities.
Impact of ICRR
The Internal Capital Adequacy Assessment Process (ICAAP) is expected to have significant implications for the Net Interest Margin (NIM) profile of the merged entity.
A look at HDFC Bank's shares
One of the worst-performing banking stocks so far in 2023, HDFC Bank is nearly 5% year-to-date. The banking scrip has corrected 6% in the last three months alone.
At the time of writing this report, HDFC Bank's shares were trading 0.63% down at Rs 1,527.05 apiece on the BSE.
(Edited by : Amrita)
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