HDFC Bank Expected to See Single-Digit Growth in Net Interest Income and Profits

India's largest private lender HDFC Bank is expected to report single-digit net interest income (NII) and profit growth in the first quarter of fiscal year 2025, due to slow loan growth. Analysts anticipate that margins will be under pressure because of the rapid repricing of loans following interest rate cuts. The bank is scheduled to announce its Q1 results on July 19, 2025.

According to Moneycontrol's survey, HDFC Bank's net interest income is projected to increase by 7 percent year-on-year, reaching around Rs 31,885 crore in Q1FY26, compared to Rs 29,837 crore in the same period last year. The bank's profit after tax (PAT) is also expected to grow by 7.4 percent, reaching approximately Rs 17,385 crore, up from Rs 16,174 crore a year ago.

Analysts' estimates are closely clustered, indicating that any surprises could lead to significant stock price movements. Among the brokerages surveyed, Kotak Institutional Equities provided the most optimistic forecasts, while Equirus Research predicted slower growth for HDFC Bank.

Factors influencing earnings:

1. Fast deposit growth, but slower credit offtake: HDFC Bank reported a 6.7 percent increase in average gross advances to about Rs 26 lakh crore as of June 30, 2025, compared to Rs 24 lakh crore in the previous year. Deposits surged by 16.2 percent to Rs 27.6 lakh crore from Rs 24 lakh crore as of June 30, 2024.

2. Margin compression: Kotak analysts anticipate a 31 basis points decline in the bank's net interest margin (NIM) to 3.4 percent in Q1FY26, attributed to faster loan repricing.

3. Higher provisions: Sequentially higher provisions are expected as HDFC Bank plans to utilize gains from the sale of shares in HDB Financial Services to boost floating provisions. The bank is likely to record a one-time gain of Rs 9,373 crore from HDB's IPO and allocate around Rs 6,000 crore for additional prudential provisions.

Investor focus this quarter: Investors are likely to monitor deposit growth, loan growth, and margin trends to evaluate the bank's performance. HDFC Bank shares outperformed the Nifty 50 index, rising 9 percent during the April-June period.

According to the source: Moneycontrol.