Bank Nifty at record high! Here's what to expect from banking majors' Q4 results

Benchmark indices, Sensex and Nifty were trading higher in Wednesday's trading session. Banking stocks also helped sub-index Bank Nifty hit an all-time high of 49,000 for the first time.

IDFC First Bank, PNB, Kotak Mahindra Bank and Bank of Baroda were the top gainers from the Bank Nifty pack. The street is also set to kick start the earnings season for the quarter ended March 2024.

In its recent report on the banking sector, Axis Securities said that it expects some moderation in the unsecured lending segment during the fourth quarter on account of tightened norms by the regulator along with caution on the part of lenders, considering the emergence of stress in certain pockets as seen in the previous quarter.

Most banks that have reported their provisional business performance have seen a significant improvement in deposit growth with healthy performance in both CASA and TDs. As a result, most banks have seen an improvement in the C-D Ratio, it said.

According to the brokerage firm, banks are likely to witness yet another strong quarter in terms of asset quality; however, it remains vigilant of any pockets of stress in the unsecured portfolios. 

Credit costs are likely to remain normalised, and reversal of AIF provisions for certain banks could support earnings. We do not see any significant levers for the ROAs of banks to improve.

It has picked ICICI Bank, SBI and HDFC Bank as top picks. For ICICI Bank, Axis Securities believes that the advances growth is expected to be healthy at 17% YoY, led by the retail and SME segment. The quantum of margin compression is likely to be lower on a sequential basis.

The brokerage firm expects margins to remain stable for HDFC Bank sequentially. The advances' growth slowed down as the focus shifted towards deposit mobilization, it said.

It expects SBI's NII growth to be muted. NIMs are likely to remain largely steady on a sequential basis with a possibility of slight compression. The advances and deposits growth is expected to remain healthy at 14/11% YoY respectively.