HDFC Bank, which has the highest weightage in the Nifty50, is expected to report more than 20 percent growth in profit, net interest income (NII) and pre-provision operating profit on July 20.
Loan growth could also be healthy, driven by corporate advances who may provide strong support after the NBFC slowdown. However, there may be a slight slow-down of growth on the retail book.
HDFC Bank fell 1.16 percent ahead of June quarter earnings, but in last nine months, it gained 21 percent, giving major support to benchmark indices.
"NII is expected to grow by 25 percent YoY driven by stable NIM and healthy loan book growth. The NIM is expected to be stable even with rising cost of fund on account of increase in unsecured high yielding portfolio," said Narnolia which expects profit growth at 24 percent and pre-provision operating profit at 25 percent YoY for the quarter.
The brokerage expects income growth from fees to remain moderate, given that it is impacted by regulatory changes in mutual fund distribution fee income.
However, the bank's management had earlier said it expects the growth of 15-16 percent in fee income at some point of time going ahead.
According to ICICI Direct, profit growth is likely to be around 23.4 percent, NII at 22.4 percent and pre-provision operating profit 25.8 percent in Q1 compared to year-ago.
"Advances run rate is expected to slow down at around 17 percent YoY. The retail segment, which has been the growth engine in recent quarters, is seen remaining behind led by a cautious approach in unsecured lending products and a slowdown in auto sales. Corporate segment growth may remain healthy as the bank continues to remain a beneficiary of NBFC slowdown, as seen last quarter," ICICI Direct said, adding that asset quality is expected to remain steady.
Motital Oswal also said asset quality is expected to remain stable, with gross non-performing assets at around 1.3 percent for Q1 FY20.
Key issues to watch for would be the outlook on SME and retail book as management indicated some stress in same, and trends in digital banking/payments and various initiatives.
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