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ICICI Securities Report
Q2 FY23 earnings growth momentum on a sequentially basis is likely to be better given:
Absence of treasury hit or possibility of some write-back as G-Sec yield and corporate spreads have moderated QoQ.
Maximum benefit of upward repricing in external benchmark lending rate and marginal cost of funds lending rate linked loans is likely to outweigh pressure on funding cost, and net interest margin trajectory is likely to be positive for most banks under our coverage.
Advance growth is gaining traction (up more than 4% QoQ), outweighing deposits growth and further expanding credit-deposit ratio.
On asset quality front, we expect incremental non-annualised slippages run-rate to be contained in the range of 0.3-0.8% (non-annualised) and credit cost to normalise.
Cost structure is expected to remain elevated. For Q2 FY23, we estimate ~16-17% YoY growth in net interest income, pre-provision operating profit and more than 35% YoY growth in profit after tax for our banks coverage.
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