INSUBCONTINENT EXCLUSIVE:
The banking sector is likely to show easing of asset quality pressure in June quarter numbers compared with the numbers for the sequential
However, bottom lines are likely to remain muted for both PSU lenders as well as corporate private banks
ICICIdirect.com expects gross non-performing assets (GNPA) of lenders under its coverage to increase 21 per cent year-on-year to Rs
3,36,134 crore against a 30 per cent traction witnessed in the previous quarter.
The high stress in Q4FY18 was on account of large-scale
stress recognition done by banks on account of events like frauds during the quarter and primarily led by new NPA framework introduced by
the Reserve Bank of India (RBI)
Net interest margins (NIM) may show some improvement on account of lower slippages on quarter-on-quarter basis (QoQ) and increase in MCLR
rates by banks.
Market experts believe NII (net interest income) growth is expected to be healthy at around 14 per cent YoY to Rs 47,938
crore against 5 per cent YoY seen in the previous quarter
Private lenders may post NII growth of around 19.3 per cent YoY.
Despite easing of NPA pain, credit cost i.e
provisioning expenses, is estimated to stay high owing to ageing of recognised non-performing assets (NPAs)
remain muted for PSU and corporate-based private banks
ICICIdirect said in a report.
Global brokerage Morgan Stanley expects strong earnings for retail banks driven by strong growth and broadly
stable margins with improving cost to income ratios and stable asset quality
growth in net interest income at HDFC Bank
Fee income should moderate to around 15 per cent YoY, driven mainly by a strong base
The brokerage expects continued improvement in costs to drive good around 18 per cent YoY growth in core pre-provision operating
96bps) after staying elevated over the past few quarters (owing to higher slippages led by demonetisation and farm loan waivers in F18)
crore, 0.2 per cent of system loans, around 55 per cent haircut), Morgan Stanley expects both impaired loans and coverage to continue to
improve.
Among various corporate lenders, the global brokerage firm expects ICICI Bank, SBI (most exposed to NCLT recoveries this quarter)
last (or second last) quarter of major stress recognition for key individual names before they settle into a more normalized slippage rate
It expects the bulk of slippages from existing impaired loans, led mainly by fraudulent transactions recognition, part of which was deferred
