India - Banking
17 January 2011
Sector update
Banks - in a state of flux
We see headwinds to banks’ FY12ii earnings growth, on account of macro vulnerabilities. Sharp increases in interest rates during 2HCY10 and prospects of further increases in CY11, likely moderation in loan growth and a less sanguine outlook for asset quality would drive earnings growth slower than previously expected. We downgrade our earnings forecast for FY12ii by 17%. We believe banks with resilient earnings outlook and strong deposit franchises with lower vulnerability to earnings outlook are best positioned. We upg
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