Banks share price target

In July 2024, the total value of credit card transactions continued the trend from June, and increased by 19.3% YoY, reaching Rs 1.7 lakh crore. Concurrently, the number of outstanding credit cards also grew, by 16.4% YoY. Private sector banks saw a 21.7% YoY rise in the value of transactions.

Unfavourable base eases credit offtake, deposit mobilization remains a concern

The values of loans, deposits, improved for most listed banks during Q1FY25. Loans for all banks, except HDFC Bank, are at the highest level in the past five quarters. However, HDFC Bank remains at the top in bank operations. CASA ratio for most banks declined YoY.

Despite the challenges, the financial services sector maintained a robust business trajectory in Q1FY25, showcasing healthy earnings growth.
In FY25E, we foresee a potential slowdown in Assets under Management (AUM) growth compared to FY24.

The banks within our coverage have exhibited a modest increase in core operating performance, mainly due to the deceleration in credit growth. Nevertheless, HDFCB has emerged as an anomaly, largely attributable to the impact of the merger and the partial deployment of surplus liquidity.