The profits of private and public sector banks are expected to remain strong in the fourth quarter of FY 2022. The capex cycle may pick up during 2HFY23, which will further improve credit growth.
Banking Sector Earning Expectations: Credit growth in the banking sector is getting stronger. Strong disbursement is visible in every segment. Disbursement growth has crossed the precovid level in many retail products. While there is a revival in the corporate segment as well. Brokerage house Motilal Oswal expects capex cycle to pick up during 2HFY23, which will further improve credit growth in FY23E. Segment wise Home, Vehicle, Tractor, Unsecured and Small Business may see good performance in 4QFY22. Whereas CV and MFI are likely to lag behind the normal level. Credit card business has also shown good momentum in 4QFY22. The brokerage says that due to all these reasons, the profits of private and public sector banks are expected to remain strong in the fourth quarter of FY 2022.
Private Bank: 38% growth may come in PAT
Brokerage house Motilal Oswal believes that the profits of private sector banks can grow by 38 per cent year-on-year in the fourth quarter of FY 2022. PPoP growth can be 10 percent on an annual basis and 6 percent on a quarterly basis. Profits are expected to increase due to reduction in credit cost, increase in fee income and healthy business growth.
Private Bank: Loan Growth
The loan growth of private banks is estimated to be 15%/17% during FY22/FY23. ICICI Bank’s loan growth on an annual basis can be 16 per cent in 4QFY22. Whereas Kotak Mahindra Bank and Axis Bank can show 20 percent and 15 percent growth. The same HDFC Bank and IndusInd Bank’s loan growth can be 21 percent and 13 percent.
Private Bank: Net Interest Margin
Net interest income of private banks can grow by 19 percent on a yearly basis. ICICI Bank’s NII may increase by 24 percent in the fourth quarter. While the NII of Axis Bank, Kotak Mahindra Bank, IndusInd Bank and HDFC Bank may be 23 percent, 20 percent, 13 percent and 13 percent.
PSU Bank: Asset quality will be better, earnings will increase
Brokerage house Motilal Oswal says that if we talk about public sector banks, then the asset quality is expected to improve in the fourth quarter. The brokerage says that it is anticipated that the traction will continue in the operating performance of PSU banks. Treasury performance may remain muted and provisions are expected to come down. Slippage will continue to reduce, which will improve asset quality along with healthy recovery. NII / PPoP growth in the fourth quarter of PSU banks can be 23% / 5% on a yearly basis. Whereas PAT may increase by 80 per cent year-on-year in 4QFY22.
Which stocks to buy advice
ICICI Bank, HDFC Bank, Federal bank, SBI, Canara Bank, Bank of Baroda, IndusInd Bank, Axis bank
Neutral on which stocks
Bandhan Bank, DCB Bank, Kotak Mahindra Bank, PNB
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of digitnews. Markets are risky, so take expert opinion before investing.)