Anand Rathi sees pickup in banks asset quality; picks top 3

After a series of bad loans bruises, banks' asset quality is likely to improve in 2013-14. The key assumption behind this is the GDP growth estimated for the next year at 5.8% as against 5.1% in 2012-13.
  • Language
  • App
  • Subscriptions
  • Specials
  • Sign-In
  • Register
GeStepAhead Travelcafe
moneycontrol.com

Home » News » Markets » MARKET OUTLOOK

Mar 23, 2013, 01.31 PM | Source: Moneycontrol.com

Anand Rathi sees pickup in banks asset quality; picks top 3

After a series of bad loans bruises, banks' asset quality is likely to improve in 2013-14. The key assumption behind this is the GDP growth estimated for the next year at 5.8% as against 5.1% in 2012-13.

Like this story, share it with millions of investors on M3

Anand Rathi sees pickup in banks asset quality; picks top 3

After a series of bad loans bruises, banks' asset quality is likely to improve in 2013-14. The key assumption behind this is the GDP growth estimated for the next year at 5.8% as against 5.1% in 2012-13.

Post Your Comments

Share Cancel

Moneycontrol Bureau

After a series of bad loan bruises, banks' asset quality is likely to improve in 2013-14. The key assumption behind this is the GDP growth estimated for the next year at 5.8% as against 5.1% in 2012-13.

"We expect India banking to improve, given the likely revival in credit demand and better deposit mobilization in a falling policy-rate context. Besides, asset quality headwinds are likely to subside, led by slower credit growth over FY11-13, lower interest rates and better industrial production," Clyton Fernandes, Kaitav Shah and Asheeta Kapadia, three banking analysts from Anand Rathi India Equities said in a report.

Anand Rathi top picks: ICICI Bank (target: Rs 1375 from current Rs 1,051), IndusInd Bank (Rs 485 from current Rs 415), ING Vysya  Bank (Rs 669 from current Rs 562) and Karur Vysya Bank  (Rs 574 from current Rs 474).

Here are some key takeaways from the report:

  • Improving asset quality is key behind decent performance of bank stocks in a falling interest rate environment.
  • Credit to improve; soft inflation to spur deposits.
  • A likely accommodative monetary policy by RBI (100bps monetary easing in CY13), expected recovery in infra credit demand and sustained improvement in household leveraging could push bank credit growth to 16% in FY14 and 15% in FY15.
  • Moreover, falling inflation would improve real interest rates, which in turn, could channel both household and corporate savings to bank term deposits.
  • Estimated deposit growth at 17% in FY14 and 16% in FY15.
  • NIM gains restricted by stretched credit-to-deposit. In a low real interest rate environment, banks would have limited flexibility to lower deposit rates.

Ads by Google

Buy, Hold, Sell ? Hear it first on M3
Anand Rathi sees pickup in banks asset quality; picks top 3

See all

Get started using your favorite social network

or

Login using moneycontrol ID

Username
Password

Need help logging in? Reset password.

Don´t have an account? Sign Up

Get started using your favorite social network

or

Simply sign up using this short form

* mandatory

UserName*

Username should be atleast 4 character

Password*

Password should be 8 or more characters,
atleast 1 number, 1 symbol & 1 upper case letter

Alert

Your Password should contain
  • 8 or more characters
  • At least 1 number
  • At least 1 symbol
  • At least 1 upper case letter
Confirm Password*
Email
Already have an account? Login