Private banking: Private banks solve asset worries nỗi

Mumbai: Most private bank has been considered a stable base by securities investors for a long time, but that belief was shaken after HDFC Bank’s Q6 business results. The decline in the asset quality of private lenders – among Dalal Street lovers – has raised concerns among market participants that Bank could also be affected by weakened asset quality due to business disruption caused by the second wave of Covid 19.

Shares of HDFC Bank ended down more than 3% at Rs 1,472.40 – recording the biggest single-day drop in two months, leading to a 1% drop in Sensex and Nifty. IndusInd Bank, IDFC First Bank,

, Axis Bank, YES Bank, Kotak Mahindra Bank and Federal Bank ended down 1-3%. The Nifty . Private Bank The index ended down 2% at 18,330.20.

“In the banking sector, each bank will have a different story to tell about the impact of the second wave. Some have faced an asset quality problem and it has raised a question for other banks,” Mahesh said. Patil, Investment Manager at Aditya Birla Sun Life Asset Management Company.

There are concerns that banks with large retail lending books will be impacted by job losses and the closure of some small businesses due to Covid. It is worrisome that if the asset quality of HDFC Bank – considered the strongest lender with the lowest NPLs on the books – is unsecured, other banks could be severely affected. than.

Private banks join in asset anxiety

Mr. Patil said: “The market is expecting some weakness for other banks in terms of asset quality, especially in segments such as SME (SME), CV (commercial vehicle). ) or unsecured loans.

Over the past decade, HDFC Bank has led the valuation higher than most of its peers. But these higher valuations have come under pressure as problems with the banking regulator were slashed by technical problems and a ban on issuing new credit cards.

HDFC Bank is trading at a tracking price to book value of 3.87x while Kotak Mahindra Bank is trading at 5.12x, ICICI Bank at 3.79x and Axis Bank is 2.68 times. The country’s largest public-sector lender, is trading at a premium of 1.5 times.

Vinit Sambre, head of equities at DSP Investment Managers, said the banking sector will see higher levels of stress due to the second wave and the absence of a loan moratorium.

Mr. Sambre said: “This quarter could be more difficult but we anticipate banks will be able to manage this period well. “Overall, that’s not a big cause for concern. The valuation premium is likely to hold. Overall, the private banking space has managed the pandemic cycle well,” Sambre said.

Despite disappointing earnings, analysts keep their buy ratings and price targets on HDFC Bank unchanged. | Private banking: Private banks solve asset worries nỗi


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