HDFC Bank's Q4 profits expected to rise by 21%, close watch on NPAs

HDFC Bank, the country's second-largest private sector lender, is expected to post a 21 percent year-on-year rise in net profit at Rs 4,832 crore as it is expected to declare its Q4 results on Saturday, a Reuters poll suggests.

The bank had reported a net profit of Rs 3,990 crore in the January to March quarter in 2017.

The Aditya Puri-led private lender will announce its Q4 FY18 results on Saturday.

On similar lines, the net interest income (NII) – difference between interest earned and expended – is projected by the Reuters poll to grow at a healthy rate of 21 percent at Rs 10,877 crore compared to Rs 9,055 crore in the year ago period.

Provisions for the quarter under review are expected to grow to Rs 1,515 crore, up 20 percent from Rs 1,262 crore in Q4 FY 17.

Asset quality and provisions will be key figures to watch out for, especially after Reserve Bank of India's new framework was released on February 12.

In Q3, gross non-performing assets (NPAs) stood at Rs 8,234.88 crore as of December 2017, which was stable at 1.29 percent of its total loans.

In the third quarter, HDFC Bank had reported divergence in gross bad loans, the difference between RBI’s assessment and that reported by the lender, stood at around Rs 2,051.76 crore for FY17, while divergence in provisions was at Rs 793.39 crore.

A Motilal Oswal report said it expects loan growth at the bank to cross 22 percent while being a retail-focused bank, HDFC and Kotak Mahindra Bank, may report strong growth in the corporate segment.

Key things to watch out for:

1. Loan growth of the bank, especially corporate portfolio.


2. Asset quality and provisions of the bank during the quarter.


3. Exposure to gems and jewellery segment after the scam is unearthed at PNB.


4. Treasury income growth impact on non-interest income.