Partner With Us NRI

Open Free Trading Account Online with ICICIDIRECT

Incur '0' Brokerage upto ₹500


Banks to repeat stellar performance in Q3FY23

ICICIdirect Research 11 Jan 2023 DISCLAIMER

What's Buzzing 

Bank’s credit growth continues to remain strong (in high teens). Banking stocks, especially PSU banks, have witnessed a recent rally in stock price led by asset quality comfort, credit growth traction and strong capital position for most of them. 


The provisional figures of banks as of December 2022 indicated robust traction in credit growth at ~18% YoY. Hence, the momentum in business growth and operational performance is expected to be healthy led by steady NIMs, no meaningful treasury gains/losses, moderation in slippages and normalised credit cost. 

Our Perspective 

As per latest RBI data, growth of 17.4% YoY for the overall banking sector indicates continued resilience in credit demand. Further, fag end of the fiscal year, being generally a busy season for the financial industry, is expected to keep the growth momentum unabated. A gradual shift of corporates towards banks and continued working capital demand from MSMEs is seen resulting in credit growth at 14-16% for FY23E (vs. earlier estimates of early double digit), which remains a positive phenomenon for the industry. The operational performance is expected to be driven by steady margins on the back of continued yield repricing and rising CD ratio offsetting higher cost of deposit, absence of significant treasury losses and steady slippages leading to stable credit cost. We expect PAT to report strong growth of 31% YoY. For our coverage universe, we believe GNPA should fall ~5 bps QoQ to 3.05%. 

Management commentary on sustainability of credit growth and margin trajectory in FY24E needs to be watched. Further, behaviour of stressed book remains under the scanner to determine any substantial impact on RoA ahead. From our coverage universe, focus on the overall performance of SBI and HDFC Bank's segmental growth remains to be watched. Bandhan Bank will be under the scanner for future asset quality and credit cost guidance.

Download Our

Download App
market app