Q4 results preview: Quick economic recovery to aid banks' profits

On the profitability front, the brokerage pegs operating profit growth at 15 per cent YoY with 12 per cent YoY for private and 19 per cent for PSBs

Lenders, including non-banking finance companies (NBFCs), are proving to be one of the strongest anchors of March quarter (Q4FY21) earnings. Aided by last year’s low base, better-than-expected economic recovery, and prudent provisioning in the first nine months of 2020-21 (9MFY21), net profit, on average, analysts estimate a sharp surge while loan book may expand in the high single digits.

However, headwinds in terms of mark-to-market losses from rising bond yields and likely increase in slippages may restrict bottom line.   

“In Q4, average bank credit growth remained muted at 6-7 per cent year-on-year (YoY). Therefore, we expect private banks under our coverage