Indian banks report earnings with loan growth squeezing margins; RBI deposit incentive offers relief. CEO searches at Kotak and Axis add intrigue. Infosys, Dr Reddy's reports test resilience.
India's largest private banks report first-quarter earnings Saturday, with profit growth expected to top 20% even as lending margins came under pressure from rapid loan expansion and a tight deposit market. The Reserve Bank of India's recent move to subsidize hedging costs on foreign currency deposits should ease some of that pressure, analysts said.
HDFC Bank Ltd grew advances 15.4% in the April-June quarter. Axis Bank Ltd posted an 18.8% rise. Both figures topped expectations. The strong loan growth squeezed net interest margins as banks competed for deposits while absorbing earlier rate cuts, Nuvama analysts said.
The RBI in June said it would absorb the cost of currency hedging for non-resident deposits. The measure aims to attract foreign inflows and improve system liquidity. Nomura analysts said commentary on how quickly banks can mobilize those deposits and narrow the funding gap will be the main focus of earnings calls.
Management transitions add another layer. Kotak Mahindra Bank Ltd is searching for a chief executive officer. Axis Bank is looking to replace its chief financial officer. HDFC Bank this week won RBI approval to appoint Rajiv Kumar as part-time chairman, replacing a predecessor who left under pressure.
Both Kotak and Axis may report net income growth exceeding 20% for the quarter. That would be the fastest pace in at least eight quarters, Bloomberg-compiled data show.
Dr Reddy's Laboratories Ltd reports Wednesday. It is expected to take a one-time charge for inventory writedown after discovering an unknown impurity in some batches of its semaglutide weight-loss drug. Production remains paused until at least October. First-quarter earnings are also set to decline because of price erosion for its generic Revlimid cancer drug in the U.S.
Infosys Ltd reports Thursday. The IT services company faces questions about how geopolitical risks and the adoption of artificial intelligence are reducing demand for traditional outsourcing. Bloomberg Intelligence analysts said the key is whether efficiency programs, offshore leverage and stable attrition can offset wage hikes and pricing pressure. Infosys carries an Alpha Score of 57, labeled Moderate, on AlphaScala's stock analysis platform.
Delta Electronics Thailand reports Friday. Quarterly earnings are set to nearly double on strong AI server demand. UOB Kay Hian said semiconductor-component shortages could delay some deliveries to the second half of the year.
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