Banks Earnings Preview - Mixed Q4; Stress, Business Outlook Vital: Prabhudas Lilladher

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Prabhudas Lilladher Report

With Honorable Supreme Court lifting its direction on non-performing asset recognition, we expect to see a realistic asset quality impact (not visible since last four quarters).

We watch out for deviation in slippages from assessment of stress and pro-forma reporting, while fresh restructuring should be negligible than reported in Q3 FY21.

Although banks have done their part of cushioning 35- 130 basis points of loans as buffer provisions and with strong provision coverage ratio, strain will be lower.

A favorable base of lockdown and lower provisioning requirement will boost earnings.

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