India Financials: 1QFY₂₇ Preview: Growth and NIMs in focus with AQ benign; NBFCs positioned for a strong quarter

Research evidence excerpt

India Financials: 1QFY₂₇ Preview: Growth and NIMs in focus with AQ benign; NBFCs positioned for a strong quarter

eychanges for more details. Tower, Santacruz(E), Mumbai - 400098, SEBI

Registration: INH000001873, (91-22) 6157-3000.

• Large private banks: We factor in 13-20% y/y (1-4% q/q) loan growth for the Gaurav Khandelwal, CFA

large private banks, with cumulative growth accelerating to 15.9% YoY (vs. (91-22) 6157-3575

14.6% in 4Q). We forecast NII growth to inflect positively for the cohort at gaurav.khandelwal@jpmorgan.com

9.5% y/y in 1Q (vs 5.4% in 4Q), with moderation in the NIM decline trajectory J.P.Tower,MorganSantacruz(E),India PrivateMumbaiLimited,- 400098,J.P. MorganSEBI

as well as loan growth acceleration. A constrained deposit environment and Registration: INH000001873, (91-22) 6157-3000.

tighter liquidity continue to challenge the NIM improvement trajectory in 1Q,

however, lower wholesale rates post the ceasefire in Middle-East conflict,

positive impact of FCNR as well as improved spreads in wholesale book should

help address some of the margin related concerns in coming quarters. While we

are OW on all 4 large private banks, ICICIBC is our preferred pick going into

1Q with strong confidence in NIM stabilization and NII growth acceleration

followed by KMB.

• PSU Banks: We factor in 15-18% loan growth y/y (1-2% q/q) for SBI, BOB

and PNB in 1Q27. Overall, cumulative growth should accelerate slightly to

16.9% YoY (vs. 16.5% in 4Q). SBI is our preferred pick in this cohort, where

NIMs will be in focus given the sharp q/q decline in the last quarter - we forecast

stable NIMs in 1Q with NII growth of 7.5% y/y. We remain OW on all three

PSB names (SBI, BOB, PNB) primarily on valuations (FY28E parent bank P/B

of 1.07x).

• NBFCs: We expect a strong 1Q for NBFCs.