Banks share price target

Day-1 of India Financials Conference 2022 spread over the week with the underlying theme ‘New-Age, New-Edge, New-Pledge’ was enriching and insightful.

Credit card transactions were on the rise in September, in the lead up to the festival season. The total value of credit card transactions was up 88.9% YoY. Private sector banks saw a jump of 96.1% YoY in terms of the value of transactions. The number of outstanding cards increased by 27.2% YoY.

Bank sectoral credit deployment data for Sep’22 suggests YoY uptick across verticals: 20% in services, 19.6% in retail credit, 13.4% in agri portfolio and 12.6% in industry.

In Sep’22, unsuccessful auto-debit requests (bounce rate) in terms of value on
NACH platform fell to a 43-month low at 21.5% (21.7% in Aug’22), which is now
almost near to Mar’19 levels.

We visited Patna (more than 30% of the credit market in Bihar with advances base of ~Rs640bn) and Muzaffarpur (second largest, Rs104bn) to interact with key market participants including vehicle dealers, MFIs, housing financiers, gold financiers, SME lenders and intermediaries.

Positive result plays: ICICI Bank, SBI, Federal Bank, IDFC FIrst Bank, Ujjivan Small Finance Bank, Bajaj Finance

Absence of treasury hit or possibility of some write-back as G-Sec yield and corporate spreads have moderated QoQ.