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ICICI Securities Report
Q4 FY22E will likely be characterised by stability and normalisation after several quarters of volatility. Net interest margins, slippages and credit cost are likely to remain at least stable, if not improve.
We expect recoveries and upgrades to outpace fresh slippages and gross- non-performing assets/stage-III pool to descend. Lenders' assessment of Emergency Credit Line Guarantee Scheme pool suggests similar behaviour as regular micro, small and medium enterprise portfolio and not a cause of concern.
With industry credit contributing to incremental growth, credit growth will sustain 4-8% QoQ momentum. Lenders are periodically assessing geopolitical situation, but there seems to be no direct impact for now.
Rise in bond yield is likely to weigh on treasury gains, but will be partially offset by lower retirement benefit provisioning.
For Q4 FY22, we estimate ~20% YoY growth in net interest income for banks, 6% operating profit growth while subsiding credit cost is expected to support more than 75% earnings growth.
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