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Dolat Capital Report
Q1 FY25 earnings growth for banks in our coverage universe will be impacted by-
moderation in net interest margin,
muted treasury gains YoY,
modest business growth QoQ, and
low base of credit costs.
Sequential decline in NIM to come from both seasonality (strong Q4 recoveries) and rising cost of fune. We build in net interest income growth of 2% QoQ and 9% YoY (excluding HDFC Bank Ltd.) for coverage banks.
Operating profit and PAT will be up 5-6% YoY (excluding -HDFC Bank), impacted by lower treasury gains YoY and a low base of credit costs. For large banks, public and private, we expect recoveries to moderate, resulting in some normalization (rise) in credit costs. Despite muted PAT growth, RoAs remain healthy, led by robust NIMs and benign credit costs. We factor in loan growth of 14% YoY and 2% QoQ for coverage banks.
Affordable housing financiers to report robust growth trends at 6% QoQ, along with steady asset quality. Loan growth for gold loan NBFCs is expected to strengthen driven by rise in gold prices, seasonality and reduced competitive intensity. Sequential yields should remain steady.
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