Shares of two private lenders namely Federal Bank and YES Bank climbed up to 4 per cent in Wednesday's trade, following their June quarter business updates. Shares of Federal Bank jumped 4.25 per cent to hit a high of Rs 175.05 on BSE. YES Bank shares rose 1.84 per cent to hit a high of Rs 24.30.
Federal Bank, which has Rekha Jhunjhunwala as investor, said its total deposits stood at Rs 2,66,082 crore at the end of June quarter, up 20 per cent over Rs 2,22,496 crore at the end of June 2023.
The bank's customer deposits (total deposits excluding interbank deposits and certificates of deposit) aggregated to Rs 2,51,991 crore, a growth of 20 per cent over Rs 2,10,422 crore as of June 30, 2023.
Its gross advances grew 20 per cent to Rs 2,24,139 crore from Rs 1,86,593 crore as of June 30, 2023. As per internal classification, retail credit book grew 25 per cent and wholesale credit book grew 14 per cent. Retail to Wholesale ratio stood at 56:44 respectively.
YES Bank, on the other hand, said its loans and advances for the June quarter jumped 14.8 per cent year-on-year (YoY) to Rs 2,29,920 crore in the June quarter from Rs 2,00,204 crore in the same quarter last year. The bank is yet to announce its Q1 results date.
In a filing to BSE, YES Bank said deposits for the quarter were up 20.8 per cent YoY to Rs 2,64,910 crore from Rs 2,19,369 crore in the corresponding quarter of last year. The bank said its deposit growth excluding CDs came in at 20.9 per cent YoY. On quarterly basis, advances grew 0.9 per cent but deposits growth fell 0.5 per cent.
Banking sector Q1 results preview For the banking sector as a whole, Nuvama expects loan growth will likely hold up with most lenders reporting QoQ growth. That said, LDR for the banking sector will increase, it said.
"Even in a seasonally weak Q1, loan growth will hold up with a 2–5 per cent QoQ rise for private banks and 1–3 per cent for state banks. PNB has guided for loan growth of 3 per cent-plus QoQ. Deposit growth remains tight with most banks likely to report higher LDR after the improvement in Q4FY24. HDFC Bank, IDFC First and Bandhan Bank may not see a rise in LDR given their already high base. NIM shall dip for most, except HDFC Bank (low base), IndusInd Bank (fixed rate book), AU (merger benefit), Federal Bank and SBI (guidance for stable NIM)," it said,.
Most state banks’ NIM will dip due to higher cost of funds. Credit cost will rise for private banks, Nuvama said.
Nomura India said the profitability of banks have remained high, as reflected in their RoE and RoA ratios, despite a slight decline in margins driven by lower credit cost and higher treasury income.
"We continue to be constructive on the banking sector. Our Buy-rated top picks are ICICI Bank, SBI, and Kotak Mahindra Bank among large banks, and Federal Bank among mid-sized banks," it said.