Q4FY21 is expected to be a normalised quarter with the performance mirroring the previous quarter on business parameters. With events like Supreme Court ruling out moratorium extension, waiver of interest, standstill norms, we believe a realistic reflection of lender's performance shall be seen this quarter. The quarter is expected to bring low treasury income or even MTM losses in some cases with yields rising ~40 bps. Overall credit cost is expected to remain elevated with some QoQ decline. Earnings are expected to show sharp spike on yearly basis on account of low base in the previous year.
Outlook on business growth, asset quality to be key to watch
This quarter could be a defining quarter for most banks as they would like to start the new fiscal while keeping demons of last fiscal aside and focus on business growth. However, since there has been a resurgence in the pandemic and partial lockdowns, there is a likelihood of a delayed recovery in credit offtake. Hence, the growth outlook presented by the management would be key to watch. In addition, preliminary assessment of impact of partial lockdown, especially on MSME and micro finance segment will remain in focus as it would lay the foundation for future earnings trajectory.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Banking_Q4FY21.pdf