We expect a lacklustre festive season for Auto OEMs to translate into slower disbursal growth for vehicle financiers. Given the steep rise in CoF (post IL&FS) and a large fixed rate book, NIM compression for asset financiers is imminent. Stable asset quality in certain segments may well be the only silver lining. We expect the HFCs in our coverage (LICHF and Repco) to report a mixed qtr. While business momentum will sustain, NIMs/spreads will come under pressure. Asset quality is a key monitorable, given LAP/CRE exposures for some players. 3QFY19 is expected to be predominantly good for banks. With system credit growth at 15% YoY (Dec-18), we expect large banks to register higher loan growth. Meanwhile, NIM tailwinds are expected to play out, driven by an increase in pricing power and lower slippages. As bond yields have fallen, treasury gains will accrue. On the asset quality front, stress accretion will reduce (except IL&FS;). Credit costs may remain high for corporate heavy banks and PCR will continue to improve. The change in guard at the RBI will impact liquidity and PSB reforms (e.g. PCA) and must be watched closely.