ICICI Bank, Muthoot Finance, Aptus — Dolat Capital Lists Top Stock Picks In BFSI Space; Q1 Results Preview

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Dolat Capital Report

Q1 FY26 earnings will be impacted by sharp sequential moderation in net interest margin and seasonally weak loan growth. Higher treasury gains should offset some of the earnings pressure. We expect earnings to grow by 2.5% YoY (ex of Kotak KGI stake sale impact in Q1 FY25) and -8% QoQ.

Net interest income is expected to grow at 3% YoY for coverage banks (5% YoY for private banks and flattish for PSBs). Operating profit will be up 5% YoY as higher treasury gains aid other income. Margins to factor in ~50 bps rate cut impact on EBLR-linked loans for most banks, where we have an immediate or quarterly rate reset.

Yields pressures will be partly offset SA rate cut across most banks. Loan growth will be impacted by seasonality and increased corporate borrowing through the bond market. Focus on NIM protection amidst a declining rate environment should also limit near-term growth in corporate loans.

Slippages across unsecured portfolios have likely peaked, though are yet to normalize.

We expect healthy growth trends for affordable housing financiers at 5% QoQ, though NPA ratios will rise owing to seasonality. Loan growth for gold NBFCs is expected to be strong at 5-6% QoQ as elevated gold prices, seasonally strong demand, and slowdown in unsecured credit drive growth.

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