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Time of India
16-07-2025
- Business
- Time of India
HDFC Bank to consider first-ever bonus issue and special dividend on July 19
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel India's largest private sector lender, HDFC Bank , announced on Wednesday that its Board of Directors will convene on July 19, 2025, to consider a landmark proposal, the issuance of bonus shares for the first time in the bank's addition, the board will deliberate on declaring a Special Interim Dividend on the bank's equity shares for the financial year 2025–26 (FY26).The proposed bonus issue will be subject to shareholder approval, as per regulatory requirements. If approved, it would mark a significant milestone for the bank, signaling management's confidence in its financial position and long-term growth announcement comes at a time when HDFC Bank shares have shown strong performance, rising approximately 4% over the past month and gaining more than 21% over the last 12 months. The stock is currently trading at around Rs 2,000 per share in the broader equity the bank reported robust growth in the first quarter of FY26. According to pro forma figures released by HDFC Bank, its loan book expanded by 6.7% quarter-on-quarter to reach Rs 26.53 lakh crore, while deposits rose 16% year-on-year to Rs 27.64 lakh crore, reflecting healthy business anticipate the bank will report a 4% to 6.3% increase in profit after tax (PAT) for the June quarter, driven by strong growth in core operating income and stable asset quality. The upcoming board meeting on July 19 will also include the consideration and approval of the financial results for Q1FY26.'If the gap in loan and deposit growth has been offset by a rundown in borrowings, the margin trajectory could turn out to be healthier relative to peers—especially if the bank has continued to run down low-yielding corporate credit,' said Pranav Gundlapalle, Head of India Financials at Bernstein.: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Economic Times
11-07-2025
- Business
- Economic Times
Dull loan growth, margin pressure, credit cost to weigh on bank earnings
Mumbai: The country's largest lender State Bank of India (SBI) is expected to report lacklustre results for the first quarter ended June, weighed down by a dip in margins and sluggish loan growth and fee income, with analyst estimates ranging from a 3% decline in profits to a 4.8% growth. ADVERTISEMENT Leading private lender HDFC Bank is seen posting a 4% to 6.3% rise in net profit, driven by a strong rise in core operating income, even as muted loan growth, margin compression, seasonally weak fee income, and elevated credit costs are expected to impact most banks, according to estimates from five brokerage houses. "We expect SBI to post muted loan and deposit growth with net interest margins (NIMs) declining by 13 basis points sequentially," Ankit Bhilani, analyst at Nomura, said in a note. "Credit cost is expected to remain contained at 0.5%." SBI's domestic NIM was at 3.35% in the first quarter of FY25. HDFC Bank's loan book rose 6.7% year-on-year in the June quarter to ₹26.53 lakh crore while deposits grew 16% to 27.64 lakh crore, it informed exchanges last week. "If the gap in loan and deposit growth has been offset by a rundown in borrowings, the margin trajectory (of HDFC Bank) could turn out to be healthier relative to peers-especially if the bank has continued to run down low-yielding corporate credit," said Pranav Gundlapalle, head of India financials at across the sector, banks are expected to report weak earnings for the June quarter, strong treasury gains, aided by a 25-basis point decline in 10-year G-sec yields, are expected to offer some cushion, according to Nomura. ADVERTISEMENT In the PSU banking space, Motilal Oswal projects modest profit after tax growth of 4.8% year-on-year, reflecting a decline in NIMs, normalised operating expenses, and higher provisions following the one-time reversal of provisioning on security receipts in Q4. Net interest income (NII) is also expected to remain flat year-on-year. Private sector banks may see a 2.5% decline in profit after tax, with pre-provision operating profit (PPOP) expected to grow only 4.2% year-on-year, according to the brokerage. NII for the sector is likely to grow just 3.1%, amid rising pressure on margins following the 100 basis points cut in the repo rate this year. Analysts expect NIMs across the sector to decline by 12 to 25 basis points. ADVERTISEMENT System-wide loan growth moderated to 10.6% year-on-year in the June quarter, with the MSME segment being the only outlier. Deposit growth is expected to remain subdued, ranging between 0% and 16% the asset quality front, fresh slippages in the first quarter are likely to remain elevated for banks with significant exposure to unsecured retail and microfinance segments. ADVERTISEMENT "NPA formation should inch up due to seasonality from the agri sector," said Bunty Chawla, analyst at IDBI Capital. (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
11-07-2025
- Business
- Time of India
Dull loan growth, margin pressure, credit cost to weigh on bank earnings
Mumbai: The country's largest lender State Bank of India (SBI) is expected to report lacklustre results for the first quarter ended June, weighed down by a dip in margins and sluggish loan growth and fee income, with analyst estimates ranging from a 3% decline in profits to a 4.8% growth. Leading private lender HDFC Bank is seen posting a 4% to 6.3% rise in net profit, driven by a strong rise in core operating income, even as muted loan growth, margin compression, seasonally weak fee income, and elevated credit costs are expected to impact most banks, according to estimates from five brokerage houses. "We expect SBI to post muted loan and deposit growth with net interest margins (NIMs) declining by 13 basis points sequentially," Ankit Bhilani, analyst at Nomura, said in a note. " Credit cost is expected to remain contained at 0.5%." SBI's domestic NIM was at 3.35% in the first quarter of FY25. HDFC Bank's loan book rose 6.7% year-on-year in the June quarter to ₹26.53 lakh crore while deposits grew 16% to 27.64 lakh crore, it informed exchanges last week. Agencies "If the gap in loan and deposit growth has been offset by a rundown in borrowings, the margin trajectory (of HDFC Bank) could turn out to be healthier relative to peers-especially if the bank has continued to run down low-yielding corporate credit," said Pranav Gundlapalle, head of India financials at Bernstein. While across the sector, banks are expected to report weak earnings for the June quarter, strong treasury gains, aided by a 25-basis point decline in 10-year G-sec yields, are expected to offer some cushion, according to Nomura. In the PSU banking space, Motilal Oswal projects modest profit after tax growth of 4.8% year-on-year, reflecting a decline in NIMs, normalised operating expenses, and higher provisions following the one-time reversal of provisioning on security receipts in Q4. Net interest income (NII) is also expected to remain flat year-on-year. Private sector banks may see a 2.5% decline in profit after tax, with pre-provision operating profit (PPOP) expected to grow only 4.2% year-on-year, according to the brokerage. NII for the sector is likely to grow just 3.1%, amid rising pressure on margins following the 100 basis points cut in the repo rate this year. Analysts expect NIMs across the sector to decline by 12 to 25 basis points. System-wide loan growth moderated to 10.6% year-on-year in the June quarter, with the MSME segment being the only outlier. Deposit growth is expected to remain subdued, ranging between 0% and 16% year-on-year. On the asset quality front, fresh slippages in the first quarter are likely to remain elevated for banks with significant exposure to unsecured retail and microfinance segments. " NPA formation should inch up due to seasonality from the agri sector," said Bunty Chawla, analyst at IDBI Capital.
Time of India
08-07-2025
- Business
- Time of India
Credit growth takes a beating in first quarter
Mumbai: Credit growth was muted for Indian banks in the June quarter, with private lenders reporting less than half the pace from the same period last year, according to proforma figures. HDFC Bank 's loan book expanded by just 6.7% in Q1FY26 reaching ₹26.53 lakh crore compared to 14.9% a year earlier (excluding merger impact with HDFC Ltd). Yes Bank posted loan growth of 5.1% in the June quarter taking its loan book to ₹2.41 lakh crore, down from 14.8%, while IDBI Bank recorded 9.2% growth to ₹2.11 lakh crore versus 17.3% in the same quarter last year. As per provisional numbers released by lenders, Bandhan Bank grew its loan book by 6.4% to ₹1.33 lakh crore, down from a growth of 21.8% recorded in the June quarter of last year. RBL Bank also grew its book by 9.3% to ₹96,704 crore versus last year's quarter. "1QFY26E is going to be a tough quarter for banks; the market largely expects results to be weak across the space," said Suresh Ganapathy, head of financial services research at Macquarie Capital. "Going by the system loans and deposits data, QoQ numbers so far have been flat. On a YoY basis, system loan growth has been sub 10% and deposit growth, a tad above 10%. On a YoY basis, we expect loan growth to be weak." Though PSU banks performed a tad better than private banks as they were more aggressive in pricing loans. Bank of Baroda posted a growth of 12.6% in its advances to ₹12.07 lakh crore in the June 2025 quarter versus a growth of 8.1% in the same period last year. Punjab National Bank said it grew loans at 9.9% to ₹11.30 lakh crore versus a rise of 12.7% in the same period last year. While Bank of India grew loans at 11.9% to ₹6.71 lakh crore versus 15.8% growth registered in the same period last year. " Public sector banks are outpacing private sector banks by more than 4% across multiple segments like mortgages, corporate loans as well as several non-mortgage retail segments such as auto loans," said Pranav Gundlapalle, head of India financials at Bernstein. A slowdown in bank credit growth is also due to corporates increasingly tapping capital markets for cheaper and faster access to funds, which led to a 32.9% surge in resource mobilisation. RBI data shows corporate bond net outstanding increased to ₹53.6 lakh crore at the end of March 2025, supported by the highest-ever fresh issuance of ₹9.9 lakh crore during 2024-25. Funds raised through capital markets rose to ₹15.7 lakh crore at the end of March 2025, from ₹11.8 lakh crore a year earlier. Meanwhile, bank lending to industry slowed to just 6.9% in FY25, indicating how Indian corporates are steadily diversifying their funding sources. "A sustained soft demand for wholesale credit and the growing role of alternative funding sources such as bonds and external commercial borrowings have intensified competition (on rates)," said Soumyajit Niyogi, Director - Core Analytical Group, India Ratings. "The robust corporate cash flows have also reduced the need for working capital financing."
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Business Standard
10-06-2025
- Business
- Business Standard
PSBs outpace private banks in loan growth for first time in 14 years
Public sector banks (PSBs) have recorded stronger loan growth compared to private banks (PVBs) for the first time in over a decade, according to a report by The Economic Times. By the end of the financial year 2024–25 (FY25), PSBs posted a year-on-year loan growth of 13.1 per cent, outpacing PVBs, which grew at 9 per cent. Shift in loan growth trends over time According to data from the Reserve Bank of India and analysis by Bernstein, PSBs last had a four per cent growth lead over PVBs in 2011. This gap widened significantly, peaking at 20 per cent in 2016, before narrowing again during the Covid-19 period, returning to four per cent by FY25. Growth across multiple loan segments The growth in PSBs was not limited to one area. They performed well in traditional segments such as mortgages and corporate lending, as well as non-mortgage retail categories like auto loans. Pranav Gundlapalle, India head for financials at Bernstein, was quoted by The Economic Times saying private banks had historically enjoyed premium valuations because of their consistent market share gains, growing 6–7 per cent faster than the overall system growth rates. Gundlapalle said if this growth advantage continued to shrink in the medium term, the justification for premium valuations would become weaker. He added that although private banks still delivered above-average profitability and traded at reasonable valuations, the current risk of a relative slowdown in growth might not be fully factored into market prices. The market continues to value private and public banks differently. ICICI Bank's price-to-book (P/B) ratio stands at around 3.5, while the State Bank of India (SBI) trades at a P/B ratio of about 1.5. This reflects differing investor views on growth potential, profitability, and risk levels between the two types of banks. Increasing competition for private banks Private banks have taken note of the increasing competition. Anindya Banerjee, group CFO of ICICI Bank, acknowledged the challenge during a post-earnings call on 19 April: 'There are very large, capable competitors who are also priced meaningfully below us. It does create some challenges in terms of growth, but I guess that's part of life. So, we will have to keep dealing with it as we go along and look at how we can drive other levers to continue to maintain profitable growth.' HDFC Bank has also raised similar concerns over the past few quarters. Loan base highlights PSBs' strong position The recent growth is even more striking given the already large loan base of PSBs. As of the end of FY25, public sector banks held ₹98.2 trillion in loans, making up 52.3 per cent of the total market. In comparison, private banks accounted for ₹75.2 trillion, or 40 per cent of the loan book.
