Banks Q3 results: improved asset quality & growth on cards

Banks are likely to report a modest growth in earnings with improved loan growth in the third quarter of the fiscal and asset quality could improve.

Kotak Institutional Equities said it expects an improvement in asset quality standpoint for most banks in the third quarter drove by lower slippages and better recuperation trends.

“There are no large corporate slippages while retail and SME should show improvement for a net premise,” it said in a research note.

While the early deliveries on the quarterly performance show accelerating trends in loan growth, which is positive, it is still below pre-Covid levels, it further said.

“Net interest margin outlook probably not going to be positive for most lenders. Lenders have moved focus to growth and we expect to anticipate that spreads should go under pressure for an unchanged loan mix,” it further said.

Private sector lenders, beginning with HDFC Bank, are set to report their results for the quarter ended December 31, 2021 before long. HDFC Bank will announce its results on January 15 while ICICI Bank will report its financial performance on January 22 and Axis Bank on January 24. ICICI Securities said the second from last quarter of 2021-22 will be characterized by growth gathering pace and uptick in collections with recuperation in business activities.