Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India Financials
Potential Result Outperformers: ICICI Bk
Potential Result Underperformers: Union Bk, BOB
Result Expectations – Key Highlights
Growth intact, but margins/asset quality could see pressure
Banks loan growth will likely still notch +19-20% yoy, but we do expect to see
margins remaining under pressure as past deposit rate hikes catch-up. While loan
growth, per se, could well be over +19-20% for banks, incremental LDRs have
cooled-off from 84% in 1HFY11 to 56% in 1HFY12. Moreover, on the asset
quality front, we expect to see asset quality remaining under pressure for most
govt. banks owing to final quarter of system based NPL recognition. Private
banks should see asset quality trends remaining status quo qoq.
2Q12 PAT: Most Govt. banks on weak foot on topline / NPLs
Most govt. banks (ex SBI) may show decline in net profit owing to a) weaker
topline growth driven by margin pressure and b) higher provisions due to last leg
of system based NPL recognition. SBI net profit growth est. at ~10% yoy.
Operating earnings for most to range in a decline of 8% to a modest growth of
15% yoy. Contrary to street expectations, SBI is the only bank that is expected to
show operating profit growth, of ~19-20% yoy. Union Bank is set to show net
profit growth of +34% largely on base effect (higher provisions and tax rate), but
PPOP earnings are estimated to be <2-3% yoy.
Private Bk: Growth (profit) at +16-22%, ex HDFC BK (30%)
Private banks, barring HDFC Bk that will continue to show +30% net profit growth,
should see net profit growth at +16-22%. ICICI Bk net profit growth expected at
+16% partly owing to fee pressure. Axis Bk and Kotak Bk to see net profit growth
of ~22%. Amongst smaller names, Yes Bk likely to report +16% yoy growth.
Federal Bank is the only bank that should see net profit growth of ~5-6% yoy on
<3-4% yoy NII growth and non-int. income weakness.
Topline growth under pressure, as margins under pressure
We estimate govt. banks to report topline (NII) growth of -5 to15%. The weakness
in topline would be a function of margin pressure as deposit rate hikes of the past
catch-up and lower incremental LDRs. We still expect loan growth to sustain at
+18-20% for most govt. banks. ICICI Bk and HDFC Bk stand out with +17-18%
yoy topline growth. Axis Bk should deliver >14-15% yoy topline growth, as
margins will likely decline by +25bps yoy, although qoq they could be up +5-7bps.
NPLs: ‘key to watch’; credit cost high
NPL slippage likely to remain elevated in 2QFY12, partly due to the residual
impact of online NPL recognition (~10-20% of loans not yet covered for most
govt. banks). ICICI Bk and HDFC Bk to still have best asset quality (though may
also see qoq NPL rise).
NBFCs: volume growth strong, but margins under pressure
We expect most NBFCs to show +20-30% yoy volume growth. But margins may
be down +20-30bps on rise in costs. HDFC Ltd. likely to maintain 2.3% spread,
but STFC may see a margin decline of +10bps qoq. LIC Hsg. will likely see
margin decline of +5-10bps qoq. Power Finco’s will likely see MTM on forex
borrowings due to +7-8% depreciation of INR vs. USD during the quarter (+30%
of PFC 2Q PPOP earnings; ~10% of REC’s PPOP earnings).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India Financials
Potential Result Outperformers: ICICI Bk
Potential Result Underperformers: Union Bk, BOB
Result Expectations – Key Highlights
Growth intact, but margins/asset quality could see pressure
Banks loan growth will likely still notch +19-20% yoy, but we do expect to see
margins remaining under pressure as past deposit rate hikes catch-up. While loan
growth, per se, could well be over +19-20% for banks, incremental LDRs have
cooled-off from 84% in 1HFY11 to 56% in 1HFY12. Moreover, on the asset
quality front, we expect to see asset quality remaining under pressure for most
govt. banks owing to final quarter of system based NPL recognition. Private
banks should see asset quality trends remaining status quo qoq.
2Q12 PAT: Most Govt. banks on weak foot on topline / NPLs
Most govt. banks (ex SBI) may show decline in net profit owing to a) weaker
topline growth driven by margin pressure and b) higher provisions due to last leg
of system based NPL recognition. SBI net profit growth est. at ~10% yoy.
Operating earnings for most to range in a decline of 8% to a modest growth of
15% yoy. Contrary to street expectations, SBI is the only bank that is expected to
show operating profit growth, of ~19-20% yoy. Union Bank is set to show net
profit growth of +34% largely on base effect (higher provisions and tax rate), but
PPOP earnings are estimated to be <2-3% yoy.
Private Bk: Growth (profit) at +16-22%, ex HDFC BK (30%)
Private banks, barring HDFC Bk that will continue to show +30% net profit growth,
should see net profit growth at +16-22%. ICICI Bk net profit growth expected at
+16% partly owing to fee pressure. Axis Bk and Kotak Bk to see net profit growth
of ~22%. Amongst smaller names, Yes Bk likely to report +16% yoy growth.
Federal Bank is the only bank that should see net profit growth of ~5-6% yoy on
<3-4% yoy NII growth and non-int. income weakness.
Topline growth under pressure, as margins under pressure
We estimate govt. banks to report topline (NII) growth of -5 to15%. The weakness
in topline would be a function of margin pressure as deposit rate hikes of the past
catch-up and lower incremental LDRs. We still expect loan growth to sustain at
+18-20% for most govt. banks. ICICI Bk and HDFC Bk stand out with +17-18%
yoy topline growth. Axis Bk should deliver >14-15% yoy topline growth, as
margins will likely decline by +25bps yoy, although qoq they could be up +5-7bps.
NPLs: ‘key to watch’; credit cost high
NPL slippage likely to remain elevated in 2QFY12, partly due to the residual
impact of online NPL recognition (~10-20% of loans not yet covered for most
govt. banks). ICICI Bk and HDFC Bk to still have best asset quality (though may
also see qoq NPL rise).
NBFCs: volume growth strong, but margins under pressure
We expect most NBFCs to show +20-30% yoy volume growth. But margins may
be down +20-30bps on rise in costs. HDFC Ltd. likely to maintain 2.3% spread,
but STFC may see a margin decline of +10bps qoq. LIC Hsg. will likely see
margin decline of +5-10bps qoq. Power Finco’s will likely see MTM on forex
borrowings due to +7-8% depreciation of INR vs. USD during the quarter (+30%
of PFC 2Q PPOP earnings; ~10% of REC’s PPOP earnings).
No comments:
Post a Comment