Banks are the top pick of brokerages for 2023, notwithstanding a sharp run up in these stocks in 2022. Their optimism is based on expectations of double-digit loan growth, a decade-high net interest margin (NIM) and low probability of material deterioration in asset quality of banks.
"For banks, our analysts are factoring in loan growth of mid-teen -to high-teen in the 2023 financial year (FY23) to FY25, with an acceleration in growth over the period. The expectation on net interest margin is the highest and credit cost estimate is the lowest in over a decade," Nomura said in a report.