Analysts at Phillip Capital reason that due to “system-wide slowdown in the credit growth”, the bank’s own credit portfolio coupled with net interest margins (NIM) are likely to remain flat. They expect the NIM to be around 4.3 per cent, down from 4.4 per cent in the March, 2019 quarter and up from 4.2 per cent touched in Q1FY19.
As for loan book, Prabhudas Lilladher pegs the amount at Rs 8.6 lakh crore for Q1FY20, a jump of 21 per cent YoY from Rs 7.08 lakh crore.
SLIPPAGES AND NPAs
Loans extended under the agricultural segment would remain under the analysts and investors’ radar as the bank has been consistently increasing provisions under the segment.
“Furthermore, the bank had indicated of being cautious on unsecured credit hence it will be crucial indicator of loan mix, margins and growth,” said analysts at Prabhudas Lilladher.
They see the provisions at Rs 1,917 crore, an increase of over 17 per cent YoY, from Rs 1,629.4 crore reported in Q1FY19. The same stood at Rs 1,889.2 crore in Q4FY19.
“Advances run rate is expected to slow down at around 17 per cent YoY to Rs 8.29 lakh crore. Retail segment, which has been the growth engine in recent quarters, is seen remaining behind led by cautious approach in unsecured lending products and slowdown in auto sales. Corporate segment growth may remain healthy as the bank continues to remain a beneficiary of NBFC slowdown, as seen last quarter,” analysts at ICICI Securities wrote in their result preview note.
Overall, analysts see the slippages at Rs 3,500 crore, down 1.4 per cent YoY from Rs 3,550 crore in Q1FY19. The same was Rs 3,577 crore in the March quarter of the previous fiscal.
The gross non-performing asset (GNPA) ratio is expected to be around 1.3 to 1.4 per cent supported by steady asset quality.