Review & Expectations Of Banking Stocks: ICICI-Direct

You can still bank on this sector…

The Bank Nifty put up a strong performance in the last three months, gaining 23% YoY vs. Nifty gaining just 3%. The southward movement in CPI to 4.38%, 10 year G-sec yields declining to 7.9% (>50 bps in three months) and growing expectation of a repo rate cut have continued the momentum in banking stocks. Banking credit growth moderated to 10.6% YoY at | 6303481 crore as on December 12, 2014 as growth in the large corporate segment and big ticket infra loans are not yet visible while past sanctions are dwindling now. Incrementally, retail loans contributed 43.2% of incremental YTD credit, growing faster at 16.3% YoY as on October 2014. Hence, total credit growth expectation is still muted around 13-14% for FY15E. Though the new government has driven acceleration in sentiments, the pick-up in capex or improvement in mid corporate performance is still not visible leading to subdued growth and the key concern area of asset quality stress continuing.

Download IDirect Banking Sector Report Dec 14