28 June 2011

Banking Sector Update; Troubling times ahead :: Emkay

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Banking Sector Update; Troubling times ahead
n    CAGR in net interest income and pre-provision profit to halve to 12% and 11% respectively for PSU banks in FY11-13E compared to FY09-11
n    NIMs for PSU banks to dip by 20bps in FY12E due to maturity mismatch in assets and liabilities. Contraction to continue in FY13E (11bps) driven by slower credit growth and drop in LDR
n    We are yet to factor in the risk of rise in credit costs and drop in NIMs due to any increase in savings bank (SB) rate in FY13E. These two could further deteriorate the growth rates
n    We prefer ICICIB, HDFCB, SIB and PNB over ANDB, BOB, SBI and YES

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