HDFC Securities: Private Banks - Better Than Expected Q1 Operating Performance
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HDFC Securities Report
For our coverage, banks operating performance was ahead of estimates. Lower expected provisions resulted in a significant earnings beat.
Our overall universe saw loan growth slow expectedly, and fall behind deposit growth. Large private banks fared best on the deposit growth front.
Net interest margins expectedly compressed for most banks within our overall universe, as a result of a sharp rise in liquidity.
Gross non-performing assets dipped QoQ for our overall universe (but our private bank universe saw a slight rise), and slippages fell across the board. However, asset quality metrics were cushioned by the moratorium.
Most banks reported a sharp decline in the proportion of loans under moratorium. From the quarter, several private banks have raised/are in the process of raising capital, which will fortify their balance sheets.
Our broad thesis - large banks, with strong, granular liability franchises, reasonable asset quality performance and sufficient capital will fare better, remains unchanged.
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