Banks Q3 Preview - Unsecured AQ Remains Under Watch; ICICI, HDFC Bank, SBI Among Motilal Oswal's Top Picks

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.Credit growth moderates; estimate FY25 credit growth at ~11%: Systemic credit growth has declined to ~11.5% from the recent high of ~16% amid a slowdown in unsecured retail and demand moderation in certain other secured segments. A few banks have already lowered their growth guidance (IndusInd Bank, RBL Bank), while select large banks are also likely to report tepid full-year growth guidance owing to a high credit-deposit ratio and rising asset quality concerns. Slower economic activity as reflected in a slower GDP growth print is closely watched and may drive growth moderation in Corporate/SME segments. While the incremental LDR has moderated to below 80% (~100% in Jul’24), the outstanding LDR remains elevated at ~80%. We thus estimate credit growth to be at ~11% for FY25, while expect FY26 growth to be broadly maintained at 12.5%..HDFC Bank (BUY) HDFC Bank Ltd. is navigating post-merger short-term challenges, including high CD ratios and inherited high-cost borrowings, with a strategic focus on deposit mobilization and balance sheet optimization.Loan growth is recovering, driven by Retail and CRB portfolios, which now contribute ~82% of the mix. We estimate a loan CAGR of ~10% and deposit CAGR of ~16% over FY24-27E.Margins are stabilizing, with NIM improving to 3.46% in Q2 FY25. The bank expects further recovery as high-cost borrowings mature and the mix shifts toward high-yielding assets. NIMs are projected at ~3.6% by FY27.  Asset quality remains strong, with GNPA/NNPA at 1.4%/0.4%. A robust provision buffer of Rs 262 billion (~1.1% of loans) offers comfort against potential credit risks.Operating efficiency is improving, with stable cost ratios despite continued investments. Cost-to-income and cost-to-asset ratios are projected to decline to ~39% and 1.7%, respectively, by FY27. HDFC Bank is positioned to deliver steady growth and profitability, supported by strategic liability management, margin recovery, and a strong focus on asset quality. We estimate RoA/RoE at 1.9%/14.9% in FY27. The standalone bank trades at 2.3x FY26E ABV..Click on the attachment to read the full report:.Oil And Gas Q3 Results Preview - OMCs To Lead The Pack; Gas Utilities, CGDs Struggle: Yes Securities.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Banks Q3 Preview - Unsecured AQ Remains Under Watch; ICICI, HDFC Bank, SBI Among Motilal Oswal's Top Picks

Higher credit costs drive sharp earnings cuts across mid-size private banks, says Motilal Oswal.

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