The 10-year G-Sec yields have seen an increase of 21 basis points since the budget. This has increased by 67 basis points to 6.89 percent since September 2021. At the same time, G-Sec bond yields with different maturities have seen an increase of 40 to 67 basis points since September 2021.
Best Banking Stocks: The 10-year G-Sec yields have seen an increase of 21 basis points since the budget. This has increased by 67 basis points to 6.89 percent since September 2021. At the same time, G-Sec bond yields with different maturities have seen an increase of 40 to 67 basis points since September 2021. At the same time, there has been an increase of 40 to 49 basis points in the 5-year, 3-year and 1-year G-Sec yields. Right now the bond yield is higher than the precovid 19 level. Even after Omicron, the way the economic recovery has remained, credit demand is expected to remain in the current quarter as well, which is also likely to show an uptick in bond yields. In such a situation, some major public sector banks may report high MTM losses. However, this impact can be mitigated by improving operating income. On the other hand private banks are ready to increase the market share.
Credit demand expected to remain high
Brokerage house Motilal Oswal says that credit demand is expected to remain better in the busy fourth quarter. At the same time, the economy continues to improve amidst fears of the new variant of the corona virus, Omicron, so the bond-yield may remain high in the next quarter even after being strong in the last few quarters or years. Talking about Treasury losses, some major public sector banks can report. According to brokerages, BOI, SBI and PNB may be affected the most, while Union Bank of India, CBK and Indian Bank will be less affected. However, improvement in operating income (reduction in slippage, loan growth and improving margins) can offset the impact of these treasury losses.
In case of increase in private bank market share
The brokerage house says that after seeing this situation, it can be said that the big private banks are well prepared to increase the market share. They will get the benefit of strong capital position, liquidity, cost of fund advantage and higher provision coverage. The brokerage has selected ICICI Bank, SBI, Axis Bank, AU Bank among its top picks.
How has the industry growth been?
According to the report, the overall industry growth is likely to be 8 percent on a yearly basis. At the same time, capex is expected to increase in the sector going forward. The brokerage house says that the growth of the large scale industry has been flat in December 2021, while the growth of the mid-scale industry has been 87 percent year-on-year. Whereas the growth of micro/small business has been 20.5 percent on a yearly basis. Overall industry growth was 7 percent. The growth of the services sector improved and stood at 10.8 per cent. The growth of the agri sector was 14.5 percent. Talking about NBFCs, there was a growth of 13.4 percent on a yearly basis and 8.8 percent on a monthly basis. Going forward, the government’s focus is on infra expenditure, which is expected to be supported by the initial capex PSUs. At the same time, revival will also be seen in private capex from FY23.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)
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