BFSI Q4 Results Preview - Muted Operating Metrics; Robust Growth, Asset Quality Trend: Dolat Capital

Dolat Capital Report

Banks will continue to witness net interest margin pressure in Q4 FY24, driven by lower spreads and sequential moderation in credit-deposit ratio seen across many banks.

We build in net interest income growth of 1% QoQ and 5% YoY for coverage banks (excluding HDFC Bank Ltd).

Operating profit will be up 11% QoQ (ex-HDFC Bank) driven by seasonally strong other income in Q4, though lower by 5% YoY (wage hike impact for public sector banks).

Profit after tax growth at 27% YoY (ex- HDFC Bank) benefits from Citi merger related loss for Axis a year ago (-5% PAT growth YoY ex Axis Bank Ltd./HDFC Bank).

Benign credit costs continue to aid earnings and return on assets remain healthy for the sector as NIM moderation is off a high base. We factor in loan growth of 15% YoY and 4% QoQ for banks under coverage.

Affordable housing financiers are expected to report robust growth trends at 7% QoQ, along with seasonally strong asset quality. Growth for gold loan non-banking financial companies to benefit from a seasonally robust quarter and rise in gold prices, though yields should remain steady.

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