Banking Sector Faces Soft Q4 FY24, PSU Banks Expected to Outperform

Banking Sector Faces Soft Q4 FY24, PSU Banks Expected to Outperform/Mint

VoM News Desk | April 6, 2024 | 03:54 PM IST | Breaking News | Follow on Google News

Banking Sector Faces Soft Q4 FY24, PSU Banks Expected to Outperform

Banking Sector Faces Soft Q4 FY24, PSU Banks Expected to Outperform

The fourth quarter of FY24 is anticipated to present challenges for the banking sector, primarily due to net interest margin (NIM) pressure, subdued deposit growth, and looming cost pressures, according to Elara Capital.

PSU banks are forecasted to exhibit stronger earnings growth compared to private banks, attributed to lower credit costs. Notably, State Bank of India (SBI) emerges as a top pick within the PSU banking segment.

While NIM pressure is expected to persist, funding cost pressures are likely to endure in Q4 FY24, impacting the sector’s performance.

The report suggests that large private banks may witness a 15.5% YoY growth in net interest income (NII), while mid-size banks and PSU banks are projected to experience 6.6% and 1.1% growth, respectively.

Profit after tax (PAT) is expected to surge quarter-to-quarter (QoQ) for PSU banks, with a 17.9% growth anticipated in Q4 FY24. Private banks are forecasted to exhibit marginal growth, while mid-size banks may witness a 1.9% increase.

HDFC Bank and Kotak Mahindra Bank are anticipated to demonstrate steady NIM growth, with HDFC Bank expected to report robust deposit growth. Axis Bank’s loan book is projected to grow in line with peers, while SBI is poised for strong loan growth driven by retail and SME segments.

Overall, while challenges persist, sustained business momentum is expected for certain banks, particularly in the retail and SME segments.

VoM News Desk

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