Here is a sneak peek into what brokerages expect from the December 2011 quarter results due today.

In the banking space, especially the private sector banks, are likely to see asset quality pressure in the third quarter of the current fiscal, analysts say. Increase in NPA stress continues to remain major concern in this segment. The domestic macro concerns in the form of slowing economic and credit growth, along with deepening sovereign debt crisis in Europe led to heavy selling in all Indian indices, including the Bankex.


Analysts at Ambit Capital expect marginal asset quality pressures during the current quarter for HDFC Bank. They also expect weaker fee income growth on the back of sluggish loan book growth.


According to IDFC Securities, private banks earnings are expected to moderate to 20% (y-o-y) from 27.5% y-o-y clocked in the previous quarter. HDFC Bank December quarter net interest income is expected to go up by 16% at Rs 3,222 crore, year-on-year (y-o-y) basis, while the PAT is expected to rise 28.9% to Rs 1,402 crore y-o-y.


Brokerage firm Motilal Oswal (MOSL) feels that HDFC Bank will continue its robust growth. MOSL says that private sector banks are well capitalised and will continue to report strong credit growth and reasonable asset quality. The brokerage firm expects over 30% earnings growth for HDFC Bank.


“We expect HDFC Bank loan growth to pick up to 24% (y-o-y) and deposit growth to 26% (y-o-y), on a lower base. While margin performance has been commendable over the last few quarters, we expect NIM to decline ~10bp (q-o-q) (4.1% in 2QFY12), led by lag impact of deposit re-pricing. NII is likely to grow ~10% (y-o-y). We expect fee income to grow 20% (y-o-y) and overall non-interest income to be in line with fee income growth," says Motilal Oswal Research in a report.


According to Angel Broking, HDFC Bank Q2FY12 net sales are expected surge 14.4% to Rs 4,468 crore, year-on-year, basis, while the net profit is expected to rise 30.5% at Rs 1,419 crore on y-o-y basis.


Kotak Securities suggests that the private banking universe is likely to grow faster at 15.5% as compared to the PSU banking space. We expect marginal compression in NIM (8-10bps) during Q3FY12 (q-o-q) as banks are almost through with the last leg of deposit re-pricing at the meaningfully higher levels, the research house said in a report.


IDBI Capital expects HDFC Bank’s margin and credit cost to remain flat sequentially. “HDFC Bank Q2FY12 net interest income is expected to go up by 14.2% at Rs 3,200 crore, (y-o-y), basis. The company's PAT is expected to go up 22.1% at Rs 1,300 crore on (y-o-y) basis," their report states.