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* The asset quality scenario is likely to be less adverse than otherwise. Banks are likely to recognize DHFL as a non-performing asset. However, the recovery of Essar Steel has emerged as a savior and is expected to limit the GNPA of banks under our coverage, with a favorable improvement for State Bank of India. The additions to GNPA are likely to increase 35% QoQ, but the recoveries are expected to improve GNPA marginally by 1% QoQ.
* The growth in advances is likely to outperform the industry for banks under our coverage, as we expect a 12% YoY rise in advances for banks under our coverage. The November advance growth in the industry was 7% YoY.
* Some banks and FIs, such as HDFC Bank, HDFC, and BAF, have released select financial metrics in the quarter. HDFC Bank has outperformed in advance growth. We expect private banks to gain market share, as performance of public sector banks (PSBs) awaiting merger are likely to remain slow, while BOB faces the impact of a realigned book. Among PSBs, SBI is likely to remain a market share gainer.
* We expect NII growth of 19% YoY for banks under our coverage, driven by interest charge on Essar Steel, and benefits of falling interest rates.
* We expect PPOP growth of 24% YoY and degrowth in PAT by 17% YoY. This is after factoring higher provisions in Yes Bank and prudent up fronting of provisions on DHFL by SBI. Ex Yes the PAT is likely to remain stable and Ex the DHFL provisions, PAT is likely to have grown by 25% YoY for banks under our coverage.
* Among AFCs(Asset Finance Companies), we expect higher provisions and GNPA, as small fleet operators grapple with multiple difficulties. This is likely to be coupled with lower disbursements growth in CVs. However, the NIMs for better run NBFCs are likely to improve.
Quarterly Estimates – Cont’d
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