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Bank stocks are seen trading firm in line with broad equity markets with investors eyeing State Bank of India's Jan-Mar earnings on Thursday for sectoral cues. Market participants are positive on SBI results following recent management comments indicating sharp improvement in asset quality, credit growth and also net interest margin performance. State Bank of India's Jan-Mar earnings are seen up 11% on quarter but down 7% on year to 37.76 bln rupees. SBI will be taking a hit of 8 bln rupees in Jan-Mar on account of wage hike provisions. In terms of asset quality, the fourth quarter is generally the best quarter for the bank. Hence, we do not expect a major rise in NPA levels. Credit growth of 16.8% on year and profit of 36.63 bln rupees is estimated.
The market will also eye movements in ING Vysya Bank which post market hours yesterday indicated that its board had approved raising 20 bln rupees via a qualified institutional placement or preferential issue of stocks. With stable asset quality and improving spreads, BOB is well placed to continue its leader's performance.
