Samvardhana Motherson’s acquisitions keep it on path to achieve ‘challenging’ Vision 2025 goals Japan is closer to Shinzo Abe's vision a year after his death Twitter Vs Threads: EU strikes at the heart of Meta's money machine The rally has many legs to take markets higherīJP Ally-Hunt Explained: Ajit Pawar turns NDA’s 5% point deficit in Maharashtra to a 10% point advantageĬan Satya Nadella sell cricket in America? Threads vs Twitter: Newcomer will struggle to reel in its rival (republished from the FT)īond bull markets: lessons from the past (republished from the FT) GuruSpeak | Meet Rohit Srivastava whose trading indicator promises to stay ahead of the curve India’s 'grey' market remains under-exploited With new sub-Rs 1000 phone Jio looks to prise open bottom of the pyramid Monsoon Watch 2023 | Can El Nino spell trouble despite improving rainfall?Įquity investors, pay close attention to crude oilĪre FMCG stocks at risk of running out of gross margin-fuelled steam?ĭeath of the dollar and the yuan’s rise: That’s a long shot Weekly Tactical Pick: Why this shipyard stock offers great valueįMCG: What should investors expect in the June 2023 quarter? Investing insights from our research team A lot depends on how much of a smooth road they see on deposit growth and how may speed breakers may come their way from external factors. The most interesting part in the first quarter’s earnings would be whether bank chiefs will shift gears towards more momentum or will they continue to stick to a measured speed. They are also looking out for unsuspecting turns lest they are caught in the wrong lane. This is reflected in other sectors as well, including infrastructure.įor banks, earnings are in the fast lane, but lenders are putting their seatbelts in place this time. The comeback though is slow and not a headlong chase for returns. Therefore, as our Chart of the Day shows, in FY23 banks turned away from risky microfinance loans, but are now coming back. Also, strong loan growth would mean a robust net interest income.īanks have learnt their lessons from the previous bad loan cycle and are exercising caution while underwriting new risk. That means earnings forgone due to bad loans are reducing. This is mainly on the back of reduced incremental provisions because the proportion of loans that have stopped paying back, or non-performing assets, is coming down steadily. Analysts at Kotak Institutional Equities are pencilling in a 58 percent year-on-year jump in the aggregate net profit of the banks they cover. But where incremental earnings look less appealing, the sheer growth of the balance sheet of banks would give them enough mojo to show sustained profits, in some cases even better profits than before. The upshot is that there would be pressure on bank earnings and analysts are already flagging a compression in net interest margin. The early updates on business performance for the April-June quarter by select banks show this trend. As such, the wedge between deposit and loan growth is still wide, and growth in low-cost current and savings account deposits has decelerated. That means another round of deposit rate hikes are round the corner. On deposits, there is scope for repricing since two-thirds pay less than 7 percent interest. Any increase of lending rates further would endanger the robust credit growth in play right now. Indeed, the share of loans with interest rates of 9 percent and above was 39 percent in the fourth quarter of FY22-it's now 56.1 percent. The scope of lending rate increases is low now since much of the transmission of policy rate hikes seems to have happened. The difference between the two is their earnings. Banks charge interest on loans they give out and pay interest on deposits they get. These two data points give us the scope of bank earnings this season. Second: Nearly two-thirds of the bank deposits carry an interest rate below 7 percent as of FY23 end. We will look at two with respect to the banking sector.įirst: The share of loans bearing interest rate 9 percent and above rose to 56.1 percent by January-March of FY23. Among the cacophony (that has engulfed even mid-cap and small-cap), there are some data points that can give investors the right focus. Of course, the speed will vary within sectors. The quarterly earnings season is upon us and there is enough noise to suggest that listed firms will report another stellar bunch of numbers. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of. The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days.
0 Comments
Leave a Reply. |
Details
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |