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Indian Banking Sector Q2 Earnings Preview - Return Ratios Likely To Improve Sequentially: Systematix

Indian Banking Sector Q2 Earnings Preview - Return Ratios Likely To Improve Sequentially: Systematix

<div class="paragraphs"><p>Indian two thousand rupee banknotes are arranged for a photograph in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)</p></div>
Indian two thousand rupee banknotes are arranged for a photograph in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Systematix Research Report

In Q2 FY22 (till September 24, 2021), we expect large private banks to outperform the banking industry in balance-sheet expansion with incremental market shares gains in credit and deposits.

We expect our banking sector coverage universe to post credit/average working funds/net interest income growth of 10.5%/11%/6.2% YoY, respectively.

Non-interest income, mainly aided by cash recoveries, would support operating profit growth.

With a lower net delinquency rate, core credit costs would also be lower, aiding the bottom line.

However, banks would utilize one-off cash recoveries in Dewan Housing Finance Corporation Ltd. loans to increase their contingent provision.

Outliers would be HDFC Bank Ltd. and ICICI Bank Ltd. in core earnings and State Bank of India in non-core earnings.

Click on the attachment to read the full report:

Systematix Indian Banking Sector - Q2FY22 Result Preview.pdf

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