Banks, Insurance Results Preview - Quarter Of Consolidation, With An Eye On Earnings Recovery: Motilal Oswal

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Motilal Oswal Report

The momentum in recovery gained over Q4 FY21 was impacted by the second Covid-19 wave, with the asset quality outlook deteriorating once again.

Business activity was impacted by the second Covid-19 wave over April–May 2021, and localised lockdowns were seen across most states.

As a result, systemic growth moderated to 5.8% as of June 18, 2021 (1% decline over FY22-year-to-date).

While economic activity has started to pick up since June, we expect business growth to remain modest over Q1 FY22 and estimate systemic loan growth of 9%/13% for FY22E/FY23E.

Nevertheless, we estimate our banking coverage universe to deliver ~6%/41% pre-provision operating profit/profit after tax growth in Q1 FY22E (on a low base).

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