Q4 result analysis: HDFC Bank vs Axis Bank vs ICICI Bank

Three major private sector banks, namely; HDFC Bank, Axis Bank and ICICI Bank have announced their financial result for the quarter ended on March 31, 2017.

Loaded with bad loans, experts warned the outlook for banking sector to be "muted" or "flat", considering the past three quarters of the financial year 2017. 

Banks have suffered from single-digit loan growth, excess liquidity, weak interest incomes and lack of resolution to their non-performing assets (NPAs) problem.

ALSO READ: Q4 was another challenging quarter for Banking sector?

Reserve Bank of India (RBI) data showed that bank credit growth have neared its six-decade low of 5.08% in FY17 as against 10.7% of FY16. 

Outstanding credit stood at Rs 78.81 lakh crore compared to Rs 75.01 lakh crore. Meanwhile, deposits grew by 11.75% in FY17 with outstanding deposits of Rs 108.05 lakh crore as of March 2017.

Top three private banks have announced their financial result for the last fiscal. Here's what it says:

And on the other side, this was experts had expected:

If you look at the above tables, in terms of net profit, HDFC Bank and Axis Bank have beaten the estimates of the experts (here, we have taken Motilal Oswal report). However, despite reporting three-fold jump, ICICI Bank failed to meet estimates. 

Rising bad loans have been the major concern for the banking sector. On the gross non-performing assets, Axis Bank and ICICI Bank managed to prove the experts wrong by reporting a slight drop. 

Both banks registered GNPA of 5.04% and 7.89% respectively as against 6.10% and 8.60% respectively as predicted by the experts. But, HDFC Bank registered GNPA at 1.05% as against 1% by the experts. 

Clearly, HDFC Bank is better placed as compared to its peers in terms of bad loans. 

Last month, Motilal Oswal in its research report had said that the private banks are expected to report healthy 18% YoY PAT growth – the best in nine quarters. ICICI Bank (+3.3x), RBL (71%), Yes Bank (30%), Kotak (28%) and IndusInd (23%) are expected to post strong performance, while Axis (-61%) will have a muted quarter. 

"In Private Banks, there has been a clear value migration from large corporate oriented banks (ICICI, Axis) to Retail banks (HDFC, Kotak, Indusind, Yes). The share of ICICI + Axis in overall Private Banks earning pool has come down from 68% in FY05 to 33% in FY17," the report had mentioned.

Going forward, it would be interesting to see if banks continue to beat estimates of experts and bring back the banking sector on track.