Banks likely to remain under pressure: Nirmal Bang

Nirmal Bang has come out with its report on banking space. According to the research firm banks are likely to remain under pressure in the near term.

Q4FY12 Results Review: Higher interest rate and slowing growth has resulted in an increase in NPA for the sector as a whole thereby deteriorating the asset quality. We believe that the current environment continues to be challenging for the Indian banking sector. Weaker rupee, inactive government policy and much higher fiscal deficit poses a risk to easing of inflation. With continuous slowdown in economy and increasing worries about asset quality overall profitability of the banks are likely to remain under pressure in the near term.
The overall banking result for Q4FY12 was a mixed bag. Most of the private banks emerged as clear winners owing to strong performance in asset quality, business growth and core profitability. The PSU banks continued to bear the brunt of asset quality concerns which only got aggravated with significant increase in restructuring book. Most of the PSU banks results were a disappointment barring an exception of few. On operational basis, few banks reported good results which are as follows:

• ICICI Bank
• City Union Bank
• Yes Bank
• IndusInd Bank
• Dena Bank
• DCB
• Karur Vysya Bank
• Kotak
• SBI

We have tried to analyze the results of the banks based on the different parameters in order to conclude which stocks looks good from investment purpose. We believe that overall the macro environment is not supportive for the banking industry as a whole as of now. But once the environment improves the banks which are fundamentally stronger would be amongst the ones which will face a faster recovery as compared to the banks which are fundamentally weak. FIIs holding more than 30% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. To read the full report click on the attachment

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