Jefferies Picks ICICI Bank, SBI and Axis Bank as Top Beneficiaries of RBI Rate Hikes
· Business · Economic Times, Indian Express
Jefferies expects the Reserve Bank of India's 25-basis-point repo rate hike to 5.5% and its calibrated tightening stance to support bank earnings. Large private lenders and state-run banks are positioned to benefit from faster loan repricing, while smaller private lenders, non-banking financial companies, and life insurers face greater pressure. Jefferies' preferred large-cap bank stocks include ICICI Bank, SBI, and Axis Bank. The brokerage raised its overall rate-hike expectation to 75 to 100 basis points, citing the structure of bank lending where external benchmark-linked loans reprice within one to three months. Public sector banks may also benefit by using higher margins to absorb wage negotiation costs and expected credit loss transition pressures despite having fewer external benchmark-linked loans.
Why it matters
Bank margins and loan pricing structures shift under higher policy rates, directly affecting borrowing costs for consumers and earnings for major financial institutions across India.
Read the original report — Economic Times
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