Kunal Shah, analyst–banking financial services and insurance (BFSI) at ICICI Securities, on Wednesday, said that the affordable housing segment could see a healthy recovery.
It’s going to be a tricky quarter for banks on various parameters. The loan growth has turned positive year-to-date in September 2021. Banks will see healthy recoveries and upgrades from their Q1 numbers as the economy has opened up.
There are also resolutions like DHFL, which could boost recoveries for many banks. Slippages may remain on the higher side, not as high as an earlier quarter, but remain high. Operationally, Q2FY22 could be a weak quarter and earnings would largely be led by lower credit cost or lower provisions.
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“Outside of leading banks and NBFCs, affordable housing financers are relatively smaller in size. We will see a good sequential uptick in terms of disbursements as well as collections for them and even some of the smaller vehicle financers could see an uptick,” Shah said in an interview with CNBC-TV.
On leading banks, he said, “We will see leading banks take a lead in terms of quarterly performance. So SBI, Axis Bank, HDFC Bank, Kotak Mahindra Bank are going to be relatively resilient.”
“Our pecking order is Axis Bank, SBI and HDFC Bank, both in terms of visibility on their operating performance as well as valuations,” said Shah.
Also, watch the accompanying video of CNBC-TV18’s Abhishek Kothari to get a handle on the Q2 expectations from the banking sector in earnings special - Quarter Se Quarter Tak (QSQT).