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Systematix research report
In the second quarter of FY22 (through September 24, 2021), we expect large private banks to outperform the banking sector in terms of balance sheet expansion with further market share gains in credit and deposits.
We expect our banking sector coverage universe to show credit growth / average working capital / net interest income of 10.5% / 11% / 6.2% year-on-year, respectively.
Non-interest income, mainly aided by cash collections, would support the growth in operating income.
With a lower net default rate, the basic credit costs would also be lower, which would improve the bottom line.
However, banks would use one-time cash collections in Dewan Housing Finance Corporation Ltd. loans. to increase their conditional provision.
Outliers would be HDFC Bank Ltd. and ICICI Bank Ltd. in core earnings and State Bank of India in non-core earnings.
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