BFSI Q3 Results Preview - Another Strong Quarter Likely: Dolat Capital

Dolat Capital Report

Banks will continue to benefit from faster asset re-pricing, low credit costs, and healthy demand for credit during Q3 FY23. Consequently, net interest income is expected to grow by 21% YoY and 5% QoQ.

Net interest margin expansion, though lower versus last quarter, shall continue. While operating profits will benefit from part reversal of mark-to-market losses, this will partly be offset by high opex including that for public sector banks this quarter (wage revision bill).

Additionally, low credit costs should drive profit after tax growth of 38% YoY. We factor in loan growth of 19% YoY for the coverage universe in Q3 FY23. Asset quality trends are likely to remain healthy, with continued moderation in gross non-performing asset ratios.

Affordable housing financiers under coverage should continue to see healthy growth trends of 6% QoQ and 30% YoY. prime lending rate hikes and recent rating upgrades should support stable spreads.

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