EVEN AS PRIVATE sector major HDFC Bank on Monday reported a moderation in net interest margin (NIM) and higher bad loans for Q2FY24, analysts are bullish on the long-term prospects of the bank as they expect NIM and asset quality to recover from hereon, senior analysts say.
HDFC Bank had reported its first set of results on Monday after completing the long-awaited merger of erstwhile Housing Development Finance Corp (HDFC) with the bank on July 1.
The merger, however, led to moderation of the bank's NIM or the difference between interest earned and expended, which fell sharply to 3.4% during July-September from 4.1% in the previous quarter.
The drag down of margin was mainly on account of higher cost of HDFC's 4.8-5 trillion of total borrowings and partially on account of implementation of the incremental cash reserve ratio (I-CRR) measure by the Reserve Bank.
According to Santanu Chakrabarti, India analyst of BFSI division at BNP Paribas, it will be difficult for HDFC Bank to achieve its 4-4.1% historical NIM trajectory in near term and the bank will likely recover NIM to 3.8% by the end of FY24.
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