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Systematix Report
In this report, the brokerage firm Systematix highlighted that the net interest margins for banks in its coverage universe are anticipated to remain flat or marginally lower in Q1 FY27.
The continued increase in the share of corporate loans is expected to weigh on yields; however, the lagged repricing of the term deposit book should partially offset this pressure. Banking system credit growth remained robust during the quarter, supported by broad-based momentum across the services, industry, and retail segments.
However, deposit growth continued to lag meaningfully behind advances growth. Fresh slippages are likely to increase sequentially due to seasonal pressures in the KCC and select retail/MFI portfolios. However, owing to elevated provisioning buffers built in Q4, credit costs should be lower for many banks.
Aggregate profitability is expected to grow 13.7% YoY (excluding IndusInd Bank and Bank of Baroda), driven by-
- strong advances growth and
- lower provisioning costs.
Under Systematix coverage on 12 banks of which its top three picks are ICIC BankC, SBI and Kotak Mahindra Bank. Further the brokerage has changed ratings for Indian Bank from Hold to Buy and Bank of Maharashtra from Buy to Hold.
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