In an interview to CNBC-TV18, Vaibhav Agrawal of Angel Broking says, the banking space would continue to see asset quality pressure in the Q3 and in the coming quarters that would accelerate.
In the banking sector, Agrawal is bullish on Syndicate Bank and Bank of Maharashtra. However, he is cautious on Central Bank of India, Andhra Bank, Dena Bank and Allahabad Bank. Below is the edited transcript of the interview with CNBC-TV18's Latha Venkatesh. Also watch the accompanying video. Q: IndusInd Bank, what are you expecting in terms of Q3 performance? Is all that in the price? A: IndusInd Bank has been one of the outperformers on the earnings front in the last few quarters. We expect that performance to continue. On the operating income front, we expect about 20% year on year growth to continue for the bank. Like other private banks, it continues to see better asset quality than the PSU space. So, on the bottom-line front, as well we expect reasonably good numbers at about 25% PAT growth. The stock is trading at significantly premium valuations to several of its peers. So, we would have a neutral view purely because of expensive valuations that it is trading at right now. Q: What is your sense on the overall asset quality in the sector? Do you expect a significant deterioration already in Q3 or do you think a lot of that pressure could show up in Q4 as many people are pointing out? A: Certainly, we would continue to see pressure even in the Q3 and definitely in the coming quarters that would accelerate. So far what we have seen is due to technical reasons such as the switchover to system recognition of NPAs and such things. But definitely the genuine slippages as well as the quantum of restructuring are likely to be on the higher side in this quarter. In fact restructuring would definitely be one of the numbers to watch out for. Most of the banks have been indicating a large amount would be coming even in this quarter. Q: You have some interesting buys, stocks that we donDiscover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
