With credit offtake being subdued in Q2FY22E in the 6-7% range, we expect the operational performance of the banking industry to remain muted. However, moderation in incremental slippages, led by improvement in collections, is expected to boost earnings. Among lenders, variation is expected on the operational front with large banks seen posting relatively better performance compared to mid and smaller peers. We expect lenders to guide improvement in asset quality and pick-up in credit offtake ahead. NBFCs are expected to post a pick-up in disbursement (as indicated in monthly updates) though improvement in asset quality is expected to be visible post Q3FY22E onwards. Premium accretion in insurance industry is expected to stay healthy with claim experience to remain key monitorable.
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