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Elara Signals Q4 Triumph for PSU Banks in Earnings Growth Over Private Sector!

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Banking sector Q4
Elara Signals Q4 Triumph for PSU Banks in Earnings Growth Over Private Sector! 4

Banking sector Q4, PSU banks, private banks, Elara report, earnings growth, NIM pressure, loan growth, deposit growth, cost pressures, wage hikes, pension provision, credit cost, net interest income (NII), profit after tax (PAT), HDFC Bank, Kotak Mahindra Bank, Axis Bank, State Bank of India, AU Small Finance Bank.


Prepare for an exclusive peek into the banking sector’s anticipated performance as the fourth quarter of FY24 (Q4 FY24) approaches. In this comprehensive preview, we’ll dissect the expected trends and forecasts outlined in Elara Capital’s latest report.

Q4 Preview: Expectations Amidst NIM Pressure and Earnings Growth

As we head towards Q4 FY24, the banking sector braces for a blend of challenges and opportunities. According to Elara Capital’s report, factors such as net interest margin (NIM) pressure, stable loan growth, softer deposit growth, and impending cost pressures, including wage hikes and pension provisions, are poised to impact the sector’s performance.

PSU Banks vs. Private Banks: Earnings Growth Showdown

Elara Capital’s analysis highlights a significant trend: PSU banks are forecasted to outperform private banks in terms of earnings growth during Q4 FY24. Focused on mitigating credit costs, PSU banks are projected to lead the charge, setting the stage for a compelling showdown between these banking segments.

NII Growth Projections: A Deep Dive

Net interest income (NII) growth serves as a vital barometer for assessing banking performance. According to Elara Capital’s projections, the banking coverage universe is expected to witness approximately 8.3% YoY growth in NII during Q4FY24. While large private banks are poised for a remarkable 15.5% YoY growth, PSU banks are anticipated to experience a more modest 1.1% growth. However, the spotlight truly shines on profit after tax (PAT), where PSU banks are forecasted to achieve an impressive 17.9% quarter-to-quarter (QoQ) growth.

Spotlight on Key Players:

  • HDFC Bank & Kotak Mahindra Bank: These stalwarts of the private banking sector are expected to maintain robust NIM growth. HDFC Bank, in particular, is set to witness substantial deposit growth, with a keen eye on the composition of these deposits for potential retail insights.
  • Axis Bank: While Axis Bank anticipates moderate loan book growth, the base effect will significantly impact year-on-year (YoY) comparisons. Investors are advised to stay vigilant for any surprises in Axis Bank’s quarterly performance.
  • State Bank of India (SBI): As the flagship PSU bank, SBI is primed to lead with robust loan growth, driven primarily by the retail and SME segments. Steady NIM is expected to fuel NII growth, making SBI an attractive pick for investors seeking stability.
  • AU Small Finance Bank: With an impressive track record of sustained momentum in loan and deposit growth, AU Small Finance Bank continues to stand out as a formidable player in the banking landscape.

Macro-Economic Outlook:

Provide an overview of the current economic landscape and how it might impact the banking sector in Q4 FY24. Discuss factors such as GDP growth projections, inflation rates, and government policies affecting the banking industry.

Regulatory Changes:

Highlight any recent regulatory updates or changes that could influence the operations of banks during Q4 FY24. This could include changes in capital adequacy requirements, loan provisioning norms, or regulatory compliance standards.

Digital Transformation:

Explore the role of digitalization and technological innovation in shaping the banking sector’s performance. Discuss how banks are leveraging digital platforms, fintech partnerships, and AI-driven solutions to enhance customer experiences and operational efficiency.

Impact of Global Events:

Analyze how global events, such as geopolitical tensions or international economic trends, might impact the Indian banking sector. Discuss potential risks and opportunities arising from global market dynamics.

Customer Behavior Trends:

Delve into evolving customer preferences and behavior patterns in banking services. Explore topics such as the rise of digital banking, shifting demographics, and changing expectations for personalized financial solutions.

Risk Management Strategies:

Examine the risk management practices adopted by banks to navigate uncertainties in the operating environment. Discuss strategies for managing credit risk, liquidity risk, and market risk amidst evolving market conditions.

Corporate Governance and Ethics:

Shed light on the importance of corporate governance and ethical practices in the banking sector. Discuss initiatives taken by banks to uphold transparency, accountability, and integrity in their operations.

Impact of Climate Change:

Address the growing concern of climate change and its implications for the banking industry. Explore how banks are incorporating environmental, social, and governance (ESG) factors into their risk assessment and lending practices.

Future Outlook:

Provide insights into the long-term outlook for the banking sector beyond Q4 FY24. Discuss emerging trends, opportunities, and challenges that could shape the future trajectory of the industry.

Investment Opportunities:

Provide investors with guidance on potential investment opportunities within the banking sector. Highlight promising stocks, sectors, or thematic investment themes that align with the prevailing market dynamics and growth prospects.



As we navigate through the final quarter of FY24, the banking sector braces itself for a dynamic landscape characterized by NIM pressure and disparities in earnings growth. With PSU banks poised to steal the limelight, investors are urged to stay informed and capitalize on the opportunities presented by this evolving market scenario. Keep a close watch as the battle between PSU and private banks unfolds, shaping the trajectory of the banking sector in the days ahead!

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