HDFC Bank shares gain ahead of Q1 results on steady loan growth outlook
India's largest private lender is expected to report resilient loan growth and stable asset quality on Saturday, though bottom-line comparisons will be skewed by a prior-year stake sale gain.
Shares of HDFC Bank climbed 1.2% to an intraday high of ₹819.80 on Friday as investors positioned ahead of the lender's June-quarter earnings on Saturday. Consensus forecasts from three major brokerages point to a mixed performance, marked by robust core credit expansion but a sharp contraction in fee and investment income.
The bank's fundamental lending business is forecast to remain solid. Motilal Oswal Financial Services estimates loan growth of 14.5% year-on-year and 2.4% sequentially, driven by corporate, business banking, agriculture and gold loans. Mortgage lending, however, is expected to stay subdued. Net interest margins are likely to hold largely flat, dipping just 2 basis points quarter-on-quarter due to seasonal agricultural stress.
Net interest income is broadly expected to rise around 8.5% to 9.2% annually, with estimates ranging from ₹34,100 crore to ₹34,335 crore. The headline figures, however, will be weighed down by an unavoidable year-on-year comparison. "The sharp decline is due to the high base of Q1 FY26, when the bank booked gains from the HDB Financial Services stake sale," said Axis Direct.
Axis Direct expects non-interest income to fall 39.4% annually, while Systematix Research projects a 41.5% drop to ₹12,721 crore. This dynamic will drag pre-provision operating profit down roughly 20% year-on-year, with Axis Direct estimating ₹28,582 crore and Systematix forecasting ₹28,863 crore.
Profit forecasts reflect this mismatch. Estimates for net profit range from ₹19,230 crore at Motilal Oswal to ₹19,796 crore at Systematix, representing annual growth of 5.9% to 9%. Sequentially, profit growth is expected to be far more modest, between 1.4% and 3%.
Asset quality provides a stabilising anchor for the balance sheet. Credit costs are projected in the 45-50 basis point range. Provisions are expected to rise sequentially, hitting ₹2,985 crore according to Systematix and ₹3,044 crore per Axis Direct, but they remain sharply lower than the elevated year-ago quarter. For market participants, the results will confirm whether the lender can maintain credit momentum while navigating significant top-line distortions.
