Credit growth, asset quality robust for pvt banks in Q2
Amongst the larger private banks, ICICI Bank and HDFC Bank led the earnings growth posting 30% year-on-year (yoy) growth, while Axis Bank grew at a more moderate 23% yoy. IndusInd Bank and YES Bank continued to post good earnings growth at around 30% yoy. Like in the previous quarter, Kotak Mahindra Bank remained the laggard with an 8% yoy growth, on the back of higher provisions.
The net interest margins (NIMs) of the banks remained robust with YES Bank and Axis Bank expanding NIMs by 10 basis points (bps) and 9 bps respectively. The NIMs for ICICI Bank came in flat at 3% quarter-on-quarter (qoq). “ICICI Bank has clearly broken out of the NIM range of 2.4-2.6% to the 3% level in the last three quarters, helped by steady improvement in both domestic and international margins,” said a Nomura report.
IndusInd Bank saw its cost of funds fall by 7 bps that enabled it to expand NIMs by 3 bps in the quarter. The YES Bank management said that given the current liquidity and interest rate scenario NIMs are expected to improve further by 10bps for the next two quarters.
Unlike the public sector banks, the asset quality of private banks has not deteriorated significantly. HDFC Bank, Axis
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