Bank Stocks Outlook For The Week - 09 to 13.10.2017
Bank Stocks Outlook For The Week - 09 to 13.10.2017
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Most bank stocks are expected to trade mixed next week, with movements likely to be stock-specific amid the beginning of announcements of corporate earnings for the quarter ended September. South Indian Bank, Lakshmi Vilas Bank, IndusInd Bank, and Karnataka Bank will detail their Jul-Sep earnings next week. We expect some momentum in mid-cap bank stocks to continue after they
performed well this week. On Wednesday, the Reserve Bank of India recommended one of the three rates treasury bills, certificates of deposit, or its repo rate to be set as the external benchmark for lending rates. We believe even though the recommendations may not be completely implement able,
given the central bank's consistent pursuit of faster monetary transmission, the suggestions are likely to be adopted in one form or the other. While we expect some pressure on margins for the whole sector, private banks will be able to better protect their margins given their better ALM (assetliability
management) and experience in the last credit cycle. Banks with higher fixed rate loan books such as HDFC Bank, IndusInd Bank, and Kotak Mahindra Bank will remain better insulated than lenders with floating rate portfolios, especially state-owned banks. However, the market remains cautious and
continues to watch out for further developments in this regard. For the sector in general, weak revenue growth led by slower credit off take, pressure on margins, and higher provisions for bad loans are expected to be a drag on earnings growth. However, even with lower support from treasury, listing of banks' insurance arms is expected to provide support on the non-interest income front. The relatively higher contribution (on the noninterest income side) by ~20-30 bps for the quarter is mainly due to the gains of listing the general insurance company by ICICI Bank and the life insurance business for SBI (State Bank of India). Adjusting for these two, the gains would be sharply lower for the current quarter. Any news on recapitalisation of public sector banks will lend cues to the sector. At a post-policy press conference on Wednesday, RBI Deputy Governor N.S. Vishwanathan said discussions for public sector bank recapitalisation were Most seen down next week on stress in sector
May rise more next week; base metal prices key underway with the government and all instruments were being considered in this regard. Stocks in the banking sector may also take cues from trends in the broader markets, with events such as release of minutes of the US Federal Open Market Committee's meeting in September due on Wednesday, and the consumer price index-based
inflation print for September to be released on Thursday.
Source : Cogencis Information Services Ltd.
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( www.rupeedesk.in )
Most bank stocks are expected to trade mixed next week, with movements likely to be stock-specific amid the beginning of announcements of corporate earnings for the quarter ended September. South Indian Bank, Lakshmi Vilas Bank, IndusInd Bank, and Karnataka Bank will detail their Jul-Sep earnings next week. We expect some momentum in mid-cap bank stocks to continue after they
performed well this week. On Wednesday, the Reserve Bank of India recommended one of the three rates treasury bills, certificates of deposit, or its repo rate to be set as the external benchmark for lending rates. We believe even though the recommendations may not be completely implement able,
given the central bank's consistent pursuit of faster monetary transmission, the suggestions are likely to be adopted in one form or the other. While we expect some pressure on margins for the whole sector, private banks will be able to better protect their margins given their better ALM (assetliability
management) and experience in the last credit cycle. Banks with higher fixed rate loan books such as HDFC Bank, IndusInd Bank, and Kotak Mahindra Bank will remain better insulated than lenders with floating rate portfolios, especially state-owned banks. However, the market remains cautious and
continues to watch out for further developments in this regard. For the sector in general, weak revenue growth led by slower credit off take, pressure on margins, and higher provisions for bad loans are expected to be a drag on earnings growth. However, even with lower support from treasury, listing of banks' insurance arms is expected to provide support on the non-interest income front. The relatively higher contribution (on the noninterest income side) by ~20-30 bps for the quarter is mainly due to the gains of listing the general insurance company by ICICI Bank and the life insurance business for SBI (State Bank of India). Adjusting for these two, the gains would be sharply lower for the current quarter. Any news on recapitalisation of public sector banks will lend cues to the sector. At a post-policy press conference on Wednesday, RBI Deputy Governor N.S. Vishwanathan said discussions for public sector bank recapitalisation were Most seen down next week on stress in sector
May rise more next week; base metal prices key underway with the government and all instruments were being considered in this regard. Stocks in the banking sector may also take cues from trends in the broader markets, with events such as release of minutes of the US Federal Open Market Committee's meeting in September due on Wednesday, and the consumer price index-based
inflation print for September to be released on Thursday.
Indusindbk - Down
Icicibank - Down
Kotakbank - Up
Icicibank - Down
Kotakbank - Up
Yesbank - Up
Pnb - Down
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Source : Cogencis Information Services Ltd.
