Last updated: 22 Jul, 2020 | 10:12 am
Going forward: At first glance, the current set of NPA numbers indicate that asset quality has improved, however, it must be noted that the picture around the asset quality of banks will be clearer only when the 6-month long moratorium imposed by RBI ends i.e after the end of August. Though the loans under moratorium have fallen to 9%, 90% of the customers under moratorium 2 were from moratorium 1 and hence, there is a high risk of rise in NPAs. Therefore, concerns around asset quality still persist, however, the third-largest private sector bank of India has a strong capital and liquidity position and with additional fundraising, it is in a more favorable position than PSU banks and small private banks. As of June 2020 Tier, 1 CAR stands at 14.62% whereas Total CAR 17.47%. Liquidity Coverage ratio stands at 120% Moreover, the impact of forced lending in the times of COVID will be seen more on PSU banks, large private banks like HDFC Bank, ICICI, and Axis are expected to hold their ground.
Our proprietary VGQM model has a BUY rating on the stock.