BENGALURU, Sept 20 Reuters India39;s top private lender HDFC Bank has warned that its merger with HDFC Ltd would hit key financial metrics including its margins and bad loan ratios, sending shares down 4 on Wednesday and dragging the bluechip Nifty 50.

HDFC Bank39;s gross bad loan ratio is expected to have increased to 1.4 as of July 1 postmerger, from a standalone 1.2 in the June quarter, while excess liquidity from the merger is seen dragging the lender39;s net interest margins down about 25 basis points.

The bank provided the outlook at an analyst meet held earlier in the week.

HDFC Bank is expected to report its first consolidated earnings next month, though a date has not been announced yet. The two companies merged effective July 1, creating a 40 billion behemoth.

The warning on nonperforming assets was prompted by a sharp rise in bad loans in the erstwhile housing financier39;s corporate loan book, Nomura analysts wrote in a note, downgrading the stock to neutral from buy.

The bank39;s NIMs could also see pressure over the next 23 quarters, Nomura added, cutting NIM estimates by about 25 basis points for fiscal year 2024 and 1520 basis points for FY2526.

Key risk is lower profitability over longer term due to the merger, Macquarie analysts wrote.

Analysts also expect a hit to return on equity and see the stock struggling over the next 12 months.

About 11.6 million HDFC Bank shares changed hands in early trade on Wednesday, versus a 30day average of 21.1…