Macquarie explains why HDFC Bank's loan growth may slow down to below 10% in Q2

In a note released on Thursday (Sept. 26), Macquarie reaffirmed its "outperform" rating on the Nifty 50 heavyweight, setting a price target of Rs 1,900.

The July-September quarter marks the first time HDFC Bank's financials will be compared year-on-year following its merger with HDFC Ltd.

Macquarie attributes the potential slowdown in loan growth to a base effect and reports of HDFC Bank planning to sell down loan assets, which could bring the bank's growth below 10 percent for the quarter.

Recent reports suggest HDFC Bank is considering selling loans worth between Rs 60,000 crore and Rs 70,000 crore.

The bank may also face pressure to lower its Loan-to-Deposit Ratio (LDR) and focus on improving margins, according to Macquarie.

The brokerage expects HDFC Bank's Net Interest Margin (NIM) to rise by 5 basis points this quarter to 3.52 percent, a figure that is expected to outperform other banks, which may see flat or declining margins.

Meanwhile, brokerage firm Nomura views HDFC Bank’s balance sheet adjustments as a gradual process.

Nomura also commented on the bank’s reported plan to sell loan assets, suggesting that while this could help resolve its LDR issue, it might negatively impact medium-term Earnings Per Share (EPS) and Return on Equity (RoE).

Consequently, Nomura has lowered its EPS estimates for HDFC Bank by 2 percent for the 2026-2027 financial year.

Nomura raised concerns about whether the market could absorb such large volumes of loans, especially at a time when the banking sector is already strained by a high LDR.

Among the 47 analysts covering HDFC Bank, 38 maintain a "buy" rating, while nine have a "hold" rating. Notably, there are no sell recommendations for the stock.

HDFC Bank's shares have been on an upward trend for six consecutive days, nearing their all-time high of Rs 1,794.

The stock also closed 0.6 percent higher on Wednesday (Sept. 25).