Nomura highlights that the Reserve Bank of India (RBI) has raised concerns over stress in unsecured retail and microfinance institution (MFI) segments. Despite this, Nomura remains optimistic about the broader banking sector, favoring banks with robust deposit franchises and strong retail underwriting practices.
Key Highlights:
- RBI’s Observations:
- Stress flagged in unsecured retail loans and MFI segments.
- Broader banking outlook remains sanguine.
- Preferred Banks:
- Among large caps: ICICI Bank and SBI are favored for their strong deposit franchises and sound retail underwriting.
- Among mid-caps: Federal Bank stands out for its focused retail growth and stable asset quality.
- Investment Focus:
- Nomura suggests avoiding banks with high exposure to unsecured retail loans.
- Banks with diversified portfolios and strong liability franchises are likely to outperform.
Nomura’s top picks include ICICI Bank and SBI in the large-cap segment and Federal Bank in the mid-cap category, reflecting confidence in their strong operational metrics and limited exposure to stressed segments.
Disclaimer:
This article is for informational purposes only and does not constitute financial advice. Please consult a qualified financial advisor before making investment decisions.
