ICICI Securities positive on Axis Bank, HDFC Bank, SBI; expects single digit growth for sector

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Kunal Shah, Analyst at ICICI Securities, shared his outlook on the banking sector, for Q1FY22 earnings, with CNBC-TV18.

Loan growth has remained weak for the banking sector in Q1FY22. On a year-on-year (YoY) basis, it was up about 5.8 percent while on a sequential basis, it has declined by 1 percent on a quarter-on-quarter (QoQ) basis in Q1FY22. One can expect the net interest margin (NIM) to improve sequentially due to the fact that interest income derecognition had impacted the NIM in Q4FY21. Large banks like HDFC Bank, ICICI Bank, Axis Bank and State Bank of India (SBI) etc. are expected to continue their outperformance in terms of their results. Kunal Shah, Analyst at ICICI Securities, shared his outlook on the sector, for Q1FY22 earnings, with CNBC-TV18.
“This quarter, in particular, is going to be distinct given that the financers have been riding on the waves of both sudden disruption in April and May, as well as the gradual recovery in June,” he said.
According to him, in terms of loan growth, there has been a sequential dip but on a lower base on a YoY basis, the momentum will sustain.
“Overall, for the banking sector, we are expecting a single-digit operating profit and earnings growth for this quarter,” he added.
“We like Axis Bank, SBI, HDFC Bank with a target price of Rs 944, Rs 544 and Rs 1,818 respectively,” Shah mentioned.
“We are looking at 0.5 percent to 2 percent kind of slippages on a non-annualised basis. HDFC Bank, Kotak Mahindra Bank, Axis Bank and SBI should do relatively better,” he said.
For the full interview, watch the accompanying video.

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SBI Life Insura1,133.40 28.25 2.56
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IndusInd Bank992.75 16.95 1.74
CompanyPriceChng%Chng
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Tata Steel1,365.15 34.65 2.60
IndusInd Bank992.30 16.65 1.71
Bajaj Finserv13,965.25 164.05 1.19
ICICI Bank685.30 7.65 1.13
CompanyPriceChng%Chng
Bharti Airtel567.90 27.35 5.06
Tata Steel1,365.00 34.35 2.58
SBI Life Insura1,133.40 28.25 2.56
Divis Labs4,890.60 99.20 2.07
IndusInd Bank992.75 16.95 1.74
CompanyPriceChng%Chng
Bharti Airtel567.90 27.45 5.08
Tata Steel1,365.15 34.65 2.60
IndusInd Bank992.30 16.65 1.71
Bajaj Finserv13,965.25 164.05 1.19
ICICI Bank685.30 7.65 1.13

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