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India Equity Research Reports, IPO and Stock News
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BANKING & NBFCS
Outlook: Neutral
q During Q3FY12, core income for Banks & NBFCs under our coverage is
expected to register a growth of 13.1% (YoY). Our private banking universe
is likely to grow faster at 15.5%, while PSU banks under our coverage
is likely to grow at 12.8%. During the same period, NBFCs are likely
to grow at 9.2%. Net profit for Banks & NBFCs under our coverage is
likely to be more moderate at 10.6% growth (YoY) mainly on back of
subdued non-interest income.
q Credit growth saw marginal drop to 17.2% YoY (as on December 16,
2011) as against 17.8% witnessed in prior fortnight (December 02, 2011);
however, it was lower than 23.8% growth witnessed a year ago. Growth
in deposit mobilization has overtaken the loan growth during last two
quarters; came at healthy levels (18.2% as on December 16, 2011) as
against 14.8% witnessed a year ago.
q We expect marginal compression in NIM (8-10bps) during Q3FY12 (QoQ
as banks are almost through with the last leg of deposit re-pricing at the
meaningfully higher levels.
q We believe asset quality pressure to persist even though banks have already
shifted to system based NPA recognition system. We expect restricted
book to rise especially on corporate book side as there has been
large addition to the CDR in recent times. However, banks are likely to
report higher recovery/upgradation as banks are already through with
the transition exercise.
q 10-Yr G-Sec yield has moved up marginally during Q3FY12 and hence
banks are likely to report marginal MTM depreciation on their investment
book. We also expect moderate growth in non-interest income for banks
under our coverage due to muted treasury profit along with lower 3rd
party distribution income.
q Top Picks: HDFC Bank, ICICI bank, SBI and BoB
Core income expected to grow at 13.1% for banks & NBFC under
our coverage; net income growth is likely to be more moderate
During Q3FY12, core income for Banks & NBFCs under our coverage is expected to
register a growth of 13.1% (YoY). Our private banking universe is likely to grow
faster at 15.5%, while PSU banks under our coverage is likely to grow at 12.8%.
During the same period, NBFCs are likely to grow at 9.2%.
Net profit for Banks & NBFCs under our coverage is likely to be more moderate at
10.6% growth (YoY) mainly on back of subdued non-interest income.
We expect HDFC bank and PNB to deliver relatively better numbers in our banking
space. Similarly in NBFC universe, we expect IDFC (on back of sale of AMC business)
and M&M Finance (on back of robust business growth) to deliver better bottom
line growth.
Credit growth saw some marginal drop vis-à-vis last fortnight;
growth in deposit mobilization has overtaken the loan growth
during last two quarters.
Credit growth saw marginal drop to 17.2% YoY (as on December 16, 2011) as
against 17.8% witnessed in prior fortnight (December 02, 2011); however, it was
lower than 23.8% growth witnessed a year ago.
Growth in deposit mobilization has overtaken the loan growth during last two quarters
- it came at healthy levels (18.2% as on December 16, 2011) as against 14.8%
witnessed a year ago. We are expecting loan growth to be around 16-17% during
FY12 and deposit growth in the system is likely to calibrate the loan growth.
Expect marginal compression in NIM (QoQ)
We expect marginal compression in NIM (8-10bps) during Q3FY12 (QoQ as banks
are almost through with the last leg of deposit re-pricing at the meaningfully higher
levels.
However, NBFCs are likely to witness continued compression on their margins, as
borrowing costs for them have been rising with limited scope to charge higher rates
from borrowers on back of moderating loan growth.
Banks to report marginal MTM depreciation on their investment
book; treasury gains are also likely to be muted
10-Yr G-Sec yield has moved up marginally during Q3FY12 and hence banks are
likely to report marginal MTM depreciation on their investment book. We also expect
moderate growth in non-interest income for banks under our coverage due to
muted treasury profit along with lower 3rd party distribution income.
Treasury profit is likely to better than Q2FY12 as 10 yr yield came down from ~9.0%
levels to 8.4%, giving opportunity to banks to book some trading profit. However,
equity book for the banks would be laggard in terms of treasury profit.
Asset quality pressure to persist even though banks have already
shifter to system based NPA recognition system; we also expect
restructuring to rise, going forward.
We also believe asset quality pressure to persist even though banks have already
shifted to system based NPA recognition system. We will be very closely watching
the corporate book especially exposure to sensitive sectors like power, aviation, textiles,
construction etc.
We expect restricted book to rise especially on corporate book side as there has
been large addition to the CDR in recent times. However, banks are likely to report
higher recovery/upgradation as banks are already through with the transition exercise.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
BANKING & NBFCS
Outlook: Neutral
q During Q3FY12, core income for Banks & NBFCs under our coverage is
expected to register a growth of 13.1% (YoY). Our private banking universe
is likely to grow faster at 15.5%, while PSU banks under our coverage
is likely to grow at 12.8%. During the same period, NBFCs are likely
to grow at 9.2%. Net profit for Banks & NBFCs under our coverage is
likely to be more moderate at 10.6% growth (YoY) mainly on back of
subdued non-interest income.
q Credit growth saw marginal drop to 17.2% YoY (as on December 16,
2011) as against 17.8% witnessed in prior fortnight (December 02, 2011);
however, it was lower than 23.8% growth witnessed a year ago. Growth
in deposit mobilization has overtaken the loan growth during last two
quarters; came at healthy levels (18.2% as on December 16, 2011) as
against 14.8% witnessed a year ago.
q We expect marginal compression in NIM (8-10bps) during Q3FY12 (QoQ
as banks are almost through with the last leg of deposit re-pricing at the
meaningfully higher levels.
q We believe asset quality pressure to persist even though banks have already
shifted to system based NPA recognition system. We expect restricted
book to rise especially on corporate book side as there has been
large addition to the CDR in recent times. However, banks are likely to
report higher recovery/upgradation as banks are already through with
the transition exercise.
q 10-Yr G-Sec yield has moved up marginally during Q3FY12 and hence
banks are likely to report marginal MTM depreciation on their investment
book. We also expect moderate growth in non-interest income for banks
under our coverage due to muted treasury profit along with lower 3rd
party distribution income.
q Top Picks: HDFC Bank, ICICI bank, SBI and BoB
Core income expected to grow at 13.1% for banks & NBFC under
our coverage; net income growth is likely to be more moderate
During Q3FY12, core income for Banks & NBFCs under our coverage is expected to
register a growth of 13.1% (YoY). Our private banking universe is likely to grow
faster at 15.5%, while PSU banks under our coverage is likely to grow at 12.8%.
During the same period, NBFCs are likely to grow at 9.2%.
Net profit for Banks & NBFCs under our coverage is likely to be more moderate at
10.6% growth (YoY) mainly on back of subdued non-interest income.
We expect HDFC bank and PNB to deliver relatively better numbers in our banking
space. Similarly in NBFC universe, we expect IDFC (on back of sale of AMC business)
and M&M Finance (on back of robust business growth) to deliver better bottom
line growth.
Credit growth saw some marginal drop vis-à-vis last fortnight;
growth in deposit mobilization has overtaken the loan growth
during last two quarters.
Credit growth saw marginal drop to 17.2% YoY (as on December 16, 2011) as
against 17.8% witnessed in prior fortnight (December 02, 2011); however, it was
lower than 23.8% growth witnessed a year ago.
Growth in deposit mobilization has overtaken the loan growth during last two quarters
- it came at healthy levels (18.2% as on December 16, 2011) as against 14.8%
witnessed a year ago. We are expecting loan growth to be around 16-17% during
FY12 and deposit growth in the system is likely to calibrate the loan growth.
Expect marginal compression in NIM (QoQ)
We expect marginal compression in NIM (8-10bps) during Q3FY12 (QoQ as banks
are almost through with the last leg of deposit re-pricing at the meaningfully higher
levels.
However, NBFCs are likely to witness continued compression on their margins, as
borrowing costs for them have been rising with limited scope to charge higher rates
from borrowers on back of moderating loan growth.
Banks to report marginal MTM depreciation on their investment
book; treasury gains are also likely to be muted
10-Yr G-Sec yield has moved up marginally during Q3FY12 and hence banks are
likely to report marginal MTM depreciation on their investment book. We also expect
moderate growth in non-interest income for banks under our coverage due to
muted treasury profit along with lower 3rd party distribution income.
Treasury profit is likely to better than Q2FY12 as 10 yr yield came down from ~9.0%
levels to 8.4%, giving opportunity to banks to book some trading profit. However,
equity book for the banks would be laggard in terms of treasury profit.
Asset quality pressure to persist even though banks have already
shifter to system based NPA recognition system; we also expect
restructuring to rise, going forward.
We also believe asset quality pressure to persist even though banks have already
shifted to system based NPA recognition system. We will be very closely watching
the corporate book especially exposure to sensitive sectors like power, aviation, textiles,
construction etc.
We expect restricted book to rise especially on corporate book side as there has
been large addition to the CDR in recent times. However, banks are likely to report
higher recovery/upgradation as banks are already through with the transition exercise.
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