2022 Budget: Private lenders like ICICI Bank, Federal Bank will benefit from 2022 budget announcements; here’s what analysts think

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

Several analysts have mentioned that the government has shown an intention for economic growth as Sitharaman increased capital expenditure for FY23 by around 35% to Rs 7.5 lakh crore from Rs 5.5 lakh crore for the EX22.

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Of all the banks, private banks are the focus and most analysts believe that the second largest private bank – ICICI Bank along with Axis Bank will have a direct and positive impact amid budget announcements.

Additionally, ICICI Bank, State Bank of India, India’s largest lender, will also benefit from the announcements, while Federal Bank and City Union Bank are other beneficiaries.

Some of the few important announcements made by Sitharaman in the 2022 budget are as follows: Extension of the ECLGS program until next financial year by allocating additional Rs 50,000 crore to Rs 5 lakh crore; Credit guarantee trust program for SMEs with injection of necessary funds; Digital currency; PMAY diet; Digital banking and EV segment betting on priority lending, among others.

Arihant Capital states that the ECLGS program provides 100% guarantee coverage to banks and NBFCs to enable them to extend emergency credit facilities to commercial enterprises/MSMEs due to the COVID-19 crisis, and the positive conditions for private lenders ICICI Bank and Axis Bank.

The government is continuously promoting digital banking, payments and fintech innovations, which have been developing at a rapid pace, say analysts from Hem Securities, further adding, “Online transfer will be useful for farmers and elderly people enabling interoperability and financial inclusion”.

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

The announced programs for MSMEs will mainly help small private banks such as City Union, Federal Bank and DCB Bank, among others, according to analysts at Axis Securities. He further added, “Any announcement on the privatization of the PSB is slightly negative for the PSU banks, especially the lower PSBs.”

In this regard, the brokerage sees a rise of 22 and 25% for ICICI Bank from the heavyweight category and Federal Bank from the broader markets in the section of the private banking category, with a target of Rs 990 per share. and 125 per share respectively over a long period. -base term.

Likewise, Chola Invest states that the announcement on the existing tax benefits for start-ups (having received a tax refund for 3 consecutive years) will be extended for another year, which will be the most positive for the largest private banks, including ICICI Bank and Axis Bank among others.

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