Bank Stocks Outlook for the week – 24 to 28.04.2017

Bank Stocks Outlook for the week – 24 to 28.04.2017

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Bank Stocks Outlook for the week – 24 to 28.04.2017 )

The Bank stocks are likely to be volatile with a negative bias next week because of concern about a rise in provisioning in Jan-Mar, as well as due to the expiry of the May derivatives series, scheduled for Thursday. The action is expected to be stock-specific because of the announcement of earnings for the quarter ended March. Axis Bank, Kotak Mahindra Bank, IDFC Bank, and Indian Bank will detail their earnings next week. So far, HDFC Bank, IndusInd Bank and YES Bank have reported healthy growth in bottomline, though provisions rose sharply. For HDFC Bank, a part of the rise in provisions was because some loans that had availed dispensation for repayment due to demonetisation slipped into the bad loan category in Jan- Mar. IndusInd Bank and YES Bank had to make standard asset provisions against a specific loan for takeover activity in the cement sector, on the directive of the Reserve Bank of India. Since the deal is likely to be concluded soon, these banks are expecting reversal of the provision. The cement account is likely that of Jaiprakash Associates Ltd, which is close to inking a deal to sell its cement business to UltraTech Cement Ltd. Further, the RBI's new norms on higher standard asset provisioning and additional disclosures are seen as a concern for most banks. The RBI has asked banks to make additional disclosures if there is a major divergence between reporting of bad loans by lenders and that assessed by the central bank under the supervisory process. It said that the merger of its five associate banks should lead to synergies and increase SBI's balance sheet strength, as well as profitability from a long-term perspective.

Source : Cogencis Information Services Ltd.