ICICI Bank, SBI, Ujjivan Small Finance Bank among top picks by Axis Securities in banking sector; check details

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Also Read: PSU Banks Q1 results update: PNB, SBI lead as lenders on a strong footing, double the bottomline Credit growth momentum is expected to continue to remain healthy primarily led by retail and SME segments. “We believe banks will continue to focus on deposit mobilization, keeping competitive intensity high. Deposit mobilization remains a key lever to support banks’ superior credit growth.

Asset Quality will continue to remain healthy. Thus, credit costs trends should not look worrisome in FY24, thereby aiding earnings," Axis Securities said in a report. It believes that banks would continue to deliver healthy earnings growth, but the pace would decelerate sharply vis-à-vis FY23.

Here are the top picks by Axis Securities among banks: ICICI Bank has consistently outperformed its peers and has been firing on all cylinders. The private lender has met most criteria in terms of growth, margins, and asset quality and has started FY24 well and Axis Securities expects this momentum to continue. Despite the moderation owing to a sharp increase in cost of funds, NIMs are expected to remain healthy at 4.5% in FY24 (similar to FY23).

“Given the ample growth opportunities, the bank will continue to invest in the franchise and strengthen its teams to drive business growth, resulting in slightly higher opex growth. However, the C-I ratio will likely remain stable. Strong asset quality metrics should keep credit costs benign and enable ICICI Bank to deliver a consistent RoA and RoE of 2-2.2% and 17-18% over FY24-25E," Axis Securities said.