Q2 preview: Another weak quarter expected for banks. Top stocks to buy ahead of results
private banks due to higher fees and lower provisions sequentially.
The subdued numbers for the lenders will be driven by muted net interest income (NII) due to slowdown in loan growth. However, asset-quality metrics should be less worrisome, barring lenders exposed to the microfinance sector, analysts said.
«Provisional business data released by a cross-section of banks suggest that loan growth has slowed, with the emphasis shifting to lowering the credit-to-deposit ratio,» said Kotak Equities.
The slower earnings trend will likely be seen for both public and private sector lenders. Private banks are expected to report a PAT growth of just 3% year-on-year, according to ICICI Securities. Meanwhile, NII growth for the July-September 2024 period is seen around 11% year-on-year.
Among the private banks, Motilal Oswal projects Bandhan Bank to lead the peers with a growth at 24% year-on-year, followed by IDFC Bank at 23% year-on-year and Federal Bank at 16% year-on-year.
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