YES Bank, AU SFB, PNB, HDFC Bank shares rise after Q2 updates | Top picks

Shares of lenders such as YES Bank Ltd, AU Small Finance Bank Ltd (AUSFB), Punjab National Bank and HDFC Bank Ltd climbed up to 3 per cent in Monday's trade following their September quarter (Q2) business updates. A rub-off was seen, with all 14 Nifty Bank index constituents gaining amid hopes of better quarterly results ahead.

AU Small Finance Bank advanced 3.02 per cent to Rs 1,016.80. Jefferies noted that the lender's AUM growth improved to 25 per cent YoY against 23 per cent YoY in Q1, led by an improving credit cycle and broad-based growth in vehicle loans. This was ahead of its expectation of 22 per cent for FY27. Deposit growth accelerated to 29 per cent YoY, while CASA growth improved to 29 per cent YoY.

"AU SFB stays among our top-picks with higher growth, improving profitability, & benefits from universal bank transition," Jefferies said.

PNB gained 3.29 per cent to Rs 113.17. PNB said its Q2 domestic and global advances grew 14.80 per cent and 12.59 per cent, respectively. Global and domestic deposits jumped 9.90 per cent and 9.44 per cent, respectively.

YES Bank advanced 1.88 per cent to Rs 21.09 as deposits grew 19.5 per cent YoY to Rs 3,54,084 crore in Q2, while loans and advances jumped 23.5 per cent YoY to Rs 3,09,675 crore.

HDFC Bank, whose new MD & CEO has been named, also gained 1.87 per cent.

"For Sep-Qtr, HDFC Bank reported 16 per cent growth in loans, 19 per cent in deposits & 11 per cent in Casa. These compare with 15 per cent, 15 per cent & 9 per cent in the Jun-qtr. LDR stands at 97 per cent. Growth rates have a boost of $11.5bn of FCNR-B deposits, of which $5.7bn is via loans - these are 3.3 per cent of deposits & 1.7 per cent of loans. Our FY27e for loans / deposits is at 13 per cent & 15 per cent. With the appointment of the new CEO, Mr Anup Bagchi, focus will stay on transition & way forward. Retain Buy," Jefferies said.

Ahead of the Q2 earnings season, Nomura said HDFC Bank, Kotak Mahindra Bank and ICICI Bank are its top picks among large banks. It likes IDFC First Bank and IndusInd Bank among mid-tier banks.

Federal Bank, Bank of Baroda (BoB), IDFC First Bank and Canara Bank added 1.4-1.9 per cent. ICICI Bank and Kotak Mahindra Bank edged higher.

MOFSL said  ICICI Bank, State Bank of India, KMB and AUSFB are its top banking picks.

For Q2, MOFSL estimate net interest income (NII) growth for its  banking coverage to improve 11.9 per cent YoY (or 2.2 per cent QoQ) and pre-provision operating profit (PPoP) to rise 4.1 per cent QoQ. It estimated private banks’ PAT to grow 24 per cent YoY and PSU banks’ PAT to grow 27 per cent YoY.

"For our coverage universe, we estimate PAT to grow 25.4 per cent YoY/9.5 per cent QoQ. We estimate our coverage banks to deliver a 15 per cent earnings CAGR over FY26-28, fueled by 20 per cent CAGR for private banks," MOFSL said.