Budget 2022: Private lenders like ICICI Bank, Federal Bank to gain from Budget 2022 announcements; here is what analysts opine

Finance Minister Nirmala Sitharaman on Tuesday made slew of announcements for various sectors – from realty to MSMEs to telecom. However, the indirect beneficiary of all the measures proposed/declared are the banking and financial segments.

ICICI Bank along with Axis Bank to have direct and positive impact amid budget announcements: PTI

Finance Minister Nirmala Sitharaman on Tuesday made slew of announcements for various sectors – from realty to MSMEs to telecom. However, the indirect beneficiary of all the measures proposed/declared are the banking and financial segments.

Several analysts mentioned that the government has shown an intent towards economic growth, as Sitharaman has increased the capital expenditure for FY23 by around 35 per cent to Rs 7.5 lakh crore as against Rs 5.5 lakh crore in FY22.

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Of all banks, the private banks are in key focus and most of the analyst believe that the second-largest private bank – ICICI Bank along with Axis Bank to have direct and positive impact amid budget announcements.

Besides, ICICI Bank, State Bank of India, India’s largest lender to also be benefitted by the announcements, while Federal Bank and City Union Bank are other beneficiaries.

Some of the few prominent announcements Sitharaman made in Budget 2022 are: Extension of the ECLGS program till next fiscal by allotting additional Rs 50000 crore to Rs 5 lakh crore; Credit Guarantee Trust for SMEs scheme with required funds infusion; Digital Currency; PMAY scheme; Digital banking and putting EV segment on priority lending among others.

Arihant Capital states that The ECLGS scheme provides 100 percent guarantee coverage to Banks and NBFCs to enable them to extend emergency credit facilities to Business Enterprises/MSMEs in view of COVID-19 crisis, and terms positive for private lenders ICICI Bank and Axis Bank.

The government is continuously encouraging digital banking, payments and fintech innovations, which have grown at a rapid pace, say analysts at Hem Securities, adding further, “Online transfer will be helpful farmers and senior citizens enabling inter-operability, and financial inclusion.”

Hem Securities also believes the private lender ICICI Bank will be largest beneficiary of these schemes and announcements made in the Budget.

The schemes announced for MSMEs will aid most to the smaller private banks such as City Union, Federal Bank, and DCB Bank, among others, analysts at Axis Securities believe. It further added, “No announcement on PSB privatization is marginally negative for PSU Banks, especially the lower PSBs.”

In this regard, the brokerage sees an upside of 22 and 25 per cent for ICICI Bank from heavy weights category and Federal Bank from broader markets in private bank category section, with a target of Rs 990 per share and 125 per share respectively on a long-term basis.

Similarly, Chola Invest states that the announcement on existing tax benefits for start-ups (had tax redemption for 3 consecutive years) will be extended by 1 more year, this shall be most positive for the largest private banks, which includes ICICI Bank and Axis Bank among others.

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