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BFSI Q3 Results Preview - Improving Credit Growth, NIM Trajectory To Aid Profitability: ICICI Securities

Q3 FY23 earnings growth momentum on a sequential basis is likely to be better.

<div class="paragraphs"><p>Close view of Indian bank notes, rupee arranged for photograph. (Photo: Vijay Sartape/ BQ Prime)</p></div>
Close view of Indian bank notes, rupee arranged for photograph. (Photo: Vijay Sartape/ BQ Prime)

BQ Prime’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 BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. 

ICICI Securities Report

Q3 FY23 earnings growth momentum on a sequential basis is likely to be better on the following grounds:

  1. continuing benefit of upward repricing in external benchmark lending rate- and marginal cost of lending rate-linked loans is likely to outweigh pressures on funding cost, while net interest margin trajectory is expected to be positive for most banks under our coverage;

  2. advances growth is gaining traction (up more than 4% QoQ) outweighing deposits growth and further expanding the credit/deposit ratio;

  3. absence of treasury hit or possibility of some write-back as G-sec yields and corporate spreads have moderated QoQ.

Cost structure is expected to remain elevated though growth rates would be relatively lower. On asset quality front, we expect incremental non-annualised slippages run-rate to be contained in the range of 0.3-0.6% (non-annualised) and credit cost to normalise.

For Q3 FY23, we estimate more than 20% YoY growth in net interest income, more than 25% YoY growth in pre-provision operating profit, and ~40% YoY growth in profit after tax for the banks under our coverage.

Click on the attachment to read the full report:

ICICI Securities BFSI Q3FY23 Preview.pdf

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