Shares of India’s top lenders show investors are looking past what is expected to be a shaky round of quarterly earnings reports and are on the rise in debt demand as local economies reopen from the latest Covid-19 lockdown.
A gauge of lenders has climbed 3.2 percent so far this month, leading the benchmark S&P BSE Sensex by 1.4 percent, as shops and businesses have reopened amid declining trends in new coronavirus cases.
Limited economic activity in April-June subdued debt growth as states imposed strict curbs to prevent the deadly virus wave that overwhelmed the country’s health infrastructure. That recovery saw in January slowed the pace-march and put back on asset quality in the spotlight, especially for lenders that have lent more to small businesses.
Analysts show an increase in bad debt amid the bank’s earnings for the latest quarter, but that effect will be lower than what was previously seen during major lockdowns. Many lenders have high provision coverage ratios and have set aside large funds for potential declines in asset quality, although they may be cautious about drawing down these provisions amid continued uncertainty over transition rates.
Here’s what analysts expect for the earnings of the largest Indian banks:
HDFC Bank will close the first-quarter earnings report for the country’s top banks on Saturday. Shares of India’s largest bank have risen 6.2 percent this year by market capitalization, lagging behind most of its peers. According to an average estimate of 15 analysts surveyed by Bloomberg, the bank will post adjusted net income of Rs 79,200,0,0,00 for the quarter. Revenue of Rs 248.4 billion is expected.
ICICI Bank NSE -1.07%
A private sector lender with 49 holds or sells vs rating purchases will announce the results on July 24. The bank’s shares have advanced 24 percent this year. Net income for the April-June period is estimated at Rs 43.6 billion, with revenue of Rs 131.6 billion.
State Bank of India NSE -0.39%
India’s largest lender by assets is also the top performer among major lenders with a 57 percent share price gain this year. SBI is projected to earn a net income of Rs 55.1 billion this quarter, with revenue of Rs 361.7 billion. The bank is yet to announce the date of release of its earnings.
Kotak Mahindra Bank NSE -0.03%
Private sector lenders led by Asia’s richest banker Uday Kotak will release their April-June earnings on July 26. It is the only bank among the top four lenders whose shares fell in 2021, falling 12 percent. It will report on net income of Rs 13.4 billion, the revenue of Rs 48.9 billion for the quarter.