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HDFC Q2 results preview: Stability in NIMs will be positive

Mortgage lender Housing Development Finance Corporation Limited or HDFC will report its second-quarter earnings on Thursday and key focus will be on loan growth and net interest margins.

By Abhishek Kothari Nov 1, 2018 8:13:25 AM IST (Published)

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Mortgage lender Housing Development Finance Corp or HDFC will report its second-quarter earnings on Thursday and key focus will be on loan growth and net interest margins.

Here's what analysts' are expecting from HDFC this time around:

In terms of stock price, over the last three months the valuation in itself has corrected by 15-16 percent on a one year or two year forward. That correction has led to believing that the worst is over because there is liquidity crisis happening with non-banking financial companies (NBFCs) and housing finance companies (HFCs).

So stability in net interest margins (NIMs) will be very important. Last quarter the NIMs declined suddenly to 3.5 percent versus 4 percent in Q4 FY18. So arresting that decline in NIMs will be positive. The loan growth is expected to be anywhere north of 18 percent.

HDFC Ltd has a strong liability franchise. The loan growth will be the key factor. The asset quality has largely remained stable, just last quarter they saw a slight take up, gross non-performing asset (NPA) below 1.2 percent will be positive. Net interest income (NII) growth of close to 16 percent is expected and net profit is also expected to grow at 15.5 percent.

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