Banking & Financial Services - Q2FY21 Result Preview - ICICI Securities

Unlocking of the economy, revival in operations to 80-85% of pre Covid level, prudent restructuring norms by RBI were highlights of the quarter. Improvement in repayment trend has reduced moratorium book for most lenders from ~30% to ~9% by July end and further lower by August 2020 as moratorium ends. Standstill classification continued till September as Supreme Court hears the compounding interest waiver case. Clarity on extent of restructuring will stay in focus rather than headline NPA numbers and quarterly earnings.

Sluggish credit growth; NIMs steady with downward bias

Preservation of capital, increased risk aversion is seen keeping credit growth sluggish at 5-6% YoY. Large private banks, HDFC Bank, Axis Bank may report relatively better credit growth. Disbursement to corporate sector would stay muted amid uncertainty on capex led by capacity utilisation below pre-Covid level. MSME segment may see marginal uptick in disbursement owing to ECLGS scheme. Retail advances may see gradual pick up but still remain below pre-Covid level. Benefit of muted slippages, aggressive cuts in deposit rates are seen to be offset by reduction in MCLR, incremental lending towards low yielding segment keeping margins under pressure. For our coverage, credit offtake is expected at 9.7% YoY to Rs. 53.5 lakh crore.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Banking_Q2FY21.pdf

Source : Equity Bulls

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