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PSU Banks May Outpace Private Banks in Q2 Earnings Growth
Banks are preparing to report how they did in the second quarter of FY27.
A brokerage firm called Motilal Oswal has shared its expectations.
It thinks public-sector banks may grow their profits faster than private banks.
It expects private banks to grow their income from lending faster, though.
The forecasts are estimates, not final results.
SBI and ICICI Bank are among the brokerage’s preferred picks.
It also expects AU Small Finance Bank to have especially strong profit growth.
The banks’ actual results may differ from these predictions.
Motilal Oswal expects PSU banks’ profit after tax to grow 27% year over year in Q2FY27, compared with 24% for private banks.
Private banks are forecast to post faster annual net interest income growth: 13%, versus 10.8% for PSU banks.
The report estimates PSU banks’ profit after tax will rise 19% quarter over quarter, compared with 1.7% for private banks.
SBI, ICICI Bank, Kotak Mahindra Bank and AU Small Finance Bank are among Motilal Oswal’s top picks.
AU Small Finance Bank is forecast to record nearly 53.6% annual profit growth and a four-basis-point sequential increase in net interest margin.
- Who
- Indian public-sector and private banks, with estimates from Motilal Oswal Financial Services.
- What
- Analysts forecast Q2FY27 earnings growth, with PSU banks expected to lead in profit growth and private banks in net interest income growth.
- Where
- India.
- When
- Q2FY27; the article refers to the corporate earnings season having begun.
- Why
- Motilal Oswal cites robust business growth and, for some PSU banks, potential stake-sale gains; it also expects differing trends in margins and net interest income.
Public-sector banks
Private banks
Profit growth
Public-sector banks
Motilal Oswal estimates PSU banks’ profit after tax will grow 27% year over year and 19% quarter over quarter.
Private banks
The report estimates private banks’ profit after tax will grow 24% year over year and 1.7% quarter over quarter.
Net interest income growth
Public-sector banks
PSU banks’ net interest income is forecast to rise 10.8% year over year and 1.6% quarter over quarter.
Private banks
Private banks’ net interest income is forecast to rise 13% year over year and 2.8% quarter over quarter.
Margin outlook
Public-sector banks
The report expects PSU banks to have resilient margins, with PNB’s net interest margin likely to improve marginally.
Private banks
The report says private banks may face an adverse impact on net interest margins, although HDFC Bank’s margin is expected to improve marginally.
Key facts
- PSU banks’ estimated PAT growth
- 27% year over year; 19% quarter over quarter
- Private banks’ estimated PAT growth
- 24% year over year; 1.7% quarter over quarter
- PSU banks’ estimated NII growth
- 10.8% year over year; 1.6% quarter over quarter
- Private banks’ estimated NII growth
- 13% year over year; 2.8% quarter over quarter
- AU Small Finance Bank forecast
- Nearly 53.6% annual profit growth and four basis points of sequential NIM expansion
- Motilal Oswal top picks named
- ICICI Bank, State Bank of India, Kotak Mahindra Bank and AU Small Finance Bank
Quotes
Motilal Oswal Financial Services
Financial services firm whose report provides the banking earnings estimates.
“Among large private banks under our coverage, NII is estimated to grow by 8.9% YoY (up 2.5% QoQ) for HDFCB and 16.8% YoY (3.1% QoQ) for ICICIBC. AXSB’s NII is likely to grow by 8.5% YoY/1.9% QoQ, and KMB’s by 14.0% YoY/5.1% QoQ.”
livemint.com
“We estimate PSU banks’ PAT to grow 27% YoY (19% QoQ) in 2QFY27, supported by robust business growth, partly coupled with stake sale gains at SBI (SBI MF & NSE), BOB (NSE), and INBK (NSE), and normalization of BoB’s PAT.”
livemint.com
Sources
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