Banks Q3 Earnings Preview - Steady Quarter, Pandemic Still A Worry: Prabhudas Lilladher
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Prabhudas Lilladher Report
Gradual opening of the economy, ramp up in pace of vaccinations and festive season in Q3 FY22 led to improvement in loan growth by up 7% YoY primarily led by retail loan growth; while deposit growth slowed to 9.5% YoY.
Said that, private banks (coverage universe) will continue to outshine with aggregate 13% YoY loan growth in Q3. For our coverage universe, we expect, 7.4% YoY net interest income growth led by 12.7% YoY growth in private banks and 2.1% YOY growth in public sector banks.
We expect a steady pre-provision operating profit growth YoY and QoQ.
Tailwinds from lower cost of funds, improved fee income and moderation of credit costs will lead earnings growth of ~51% YoY and flattish QoQ.
Collection efficiency, outcome of Emergency Credit Line Guarantee Scheme portfolio, restructuring commentary and future outlook on credit growth are key factors to be watched out for in Q3 FY22 results.
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