Banks, Specialised NBFCs Q1 Preview - Growth To Remain Healthy Despite Seasonally Weak Quarter: Nirmal Bang

Nirmal Bang Report

As per the latest Reserve Bank of India data as of June 14, 2024, system loan growth (adjusted for excluding -HDFC Bank Ltd.) stood at a healthy 15.6% YoY, which indicates better topline growth for banks.

Sectoral credit deployment data shows continued double-digit growth in retail and services segments, but the Industrial segment growth remains in single digits.

We expect our coverage banks to report earnings growth of 16.2% YoY on the back of 20.7% YoY credit growth, 15.8% YoY growth in operating profit and continued low credit costs. In terms of margins, banks are expected to see mixed trends.

Within our coverage banks, private banks are expected to see mix trend in net interest margins ranging from -18 basis points to 8 bps sequentially. Supported by lower credit/deposit ratio and better liquidity position, we expect public sector banks under our coverage to report a marginal improvement in NIMs.

As this will be the first quarter of available for sale reserve creation, the transfers to and from held to maturity/ fair value through profit or loss/available for sale will be a key monitorable and due to lower treasury income, some banks may see relatively higher cost ratios.

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