Selective PSU banks may report contraction in Q4 earnings

Motilal Oswal has come with its quarterly earning estimates on banking & finance sector for March 2012.

Banking & finance sector will report a robust earnings growth of 36%, driven by base effect in State Bank. Excluding SBI, earnings growth stands at 10.2%. The composition stands as: Private Banks up 22% YoY, PSU Banks (Excluding SBI) down 1.4% YoY and NBFCs up 14% YoY. Several PSU banks will report contraction in earnings (Canara Bank, Andhra Bank, Union Bank, OBC, etc) due to higher credit costs, although BoI, Indian Bank, etc will report earnings growth. Asset quality will remain the most important driver to performance of these stocks. Private sector banks are expected to report a 22% earnings growth, with several names like HDFC Bank, Yes Bank, Indusind Bank, ING Vysya, etc expected to report earnings growth of 25-30%.

Company	Net interest income			Net profit
	Mar.12	% YoY	% QoQ	Mar.12	% YoY	% QoQ
Axis Bank	21,147	24.3	-1.2	11,098	8.8	0.7
Federal Bank	5,439	21.5	3	2,021	17.7	0.1
HDFC Bank	32,211	13.4	3.4	14,576	30.8	2
ICICI Bank	28,344	12.9	4.5	17,849	22.9	3.3
IndusInd Bank	4,548	17.2	5.6	2,197	28	6.7
ING Vysya Bank	3,350	24.9	3.5	1,182	29.5	-1.1
South Indian Bank	2,795	26.1	2.2	1,034	26.5	1.1
Yes Bank	4,580	31.4	7.1	2,657	30.7	4.6
Andhra Bank	9,703	12.6	-1.4	2,698	-13.7	-11
Bank of Baroda	27,145	3.9	2.2	13,022	0.6	1
Bank of India	20,716	-10.2	0.2	6,378	29.2	-10.9
Canara Bank	19,922	0.9	3.8	8,060	-10.4	-7.9
Indian Bank	12,125	9.1	3.6	5,104	16.3	-2.9
Oriental Bank	11,241	10.9	-1.4	3,237	-3	-8.6
PNB	35,926	18.6	1.6	12,088	0.7	5.1
State Bank	122,005	51.4	6.4	34,158	NM	4.7
Union Bank	18,261	6.4	2.5	4,349	-27.2	120.8
Dewan Housing	1,366	43.2	10.1	840	43.3	12.1
HDFC	15,240	11.2	23.3	12,297	7.7	25.3
IDFC	5,765	21.4	5.6	3,736	30	19
LIC Housing Fin	3,570	-15.1	9.6	2,472	-15.1	9.5
M&M Financial	4,737	19.6	13.4	1,763	12.6	14
Power Finance Corp	11,096	31.6	1.1	7,680	31.1	-3
Rural Electric Corp	10,538	23.4	4.8	7,966	20.9	12.9
Shriram Transport Fin	3,046	-6.1	-2.1	3,370	0.3	11.3

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