What Are UBS’s Key Takeaways From Q2 Performance Across Indian Financials?
About UBS’s Q2 Market Observations
UBS has released its Q2 updates on major Indian companies, covering banks, NBFCs, and retail majors. The brokerage notes that while growth remains steady across most financials, performance divergence continues — with some players exceeding expectations while others face near-term headwinds. UBS’s review provides a snapshot of sector momentum as India’s credit and consumption cycles evolve through FY26.
🏦 L&T Finance: Disbursements grew 25% YoY (beat UBS est. 17%); retail AUM growth 17% YoY, in line.
🏦 Bandhan Bank: Limited improvement in CE (10bp QoQ); loan growth accelerated QoQ, deposit growth steady.
🏦 Bajaj Finance: Consolidated AUM growth 23.6% YoY, in line with UBS estimates.
🏦 Bank of Baroda: Sequential acceleration in loan & deposit growth (beat UBS estimates).
🏦 IndusInd Bank: Sequential decline in loans & deposits continues (down ~2% QoQ, vs down ~3.3% in Q1).
🏦 Kotak Mahindra Bank: Business traction remains healthy.
🏦 AU SFB: Inline business growth; CD ratio increases sequentially.
🏦 HDFC Bank: Deposit traction steady; loan growth picks up sequentially.
UBS notes that the second quarter reflected early signs of normalization in loan and deposit trends for large banks, while retail-focused institutions continued to expand steadily. Lending activity is accelerating in select NBFCs, though deposit traction remains a critical monitorable in the near term.
Market watchers often turn to Nifty Advisory Insight for cross-sector sentiment checks, particularly when evaluating earnings consistency across Indian large caps.
UBS’s Bank-Wise Insights
💡 IndusInd Bank: Continues to face sequential decline in loans and deposits, signaling margin compression risks.
💡 Kotak Mahindra Bank: Solid operational metrics with balanced business traction.
💡 AU SFB: Credit-to-deposit ratio rising sequentially; overall growth remains stable.
💡 Bank of Baroda: Positive surprise on both loan and deposit growth, beating UBS projections.
UBS maintains a constructive stance on large private banks but remains selective on smaller lenders amid uneven liability growth trends. The report emphasizes that sustainable funding and disciplined credit expansion will remain the differentiating factors in FY26.
Active traders reviewing sectoral rotation patterns also follow Bank Nifty Advise Forecast to anticipate how banking performance could influence index direction in the near term.
Outlook on Financials and Retail
🛍️ Retail: Avenue Supermarts’ below-expectation sales growth may moderate sentiment after the recent stock rally.
🏦 Banks: Steady to improving trends seen in HDFC Bank and Bank of Baroda highlight systemic resilience.
💬 UBS Takeaway: Q2 numbers reinforce the gradual but broad-based recovery in credit demand and deposit growth across key financial institutions.
UBS expects the financial sector to continue outperforming other domestic segments as credit penetration deepens and liquidity conditions remain supportive. The firm sees stronger data visibility from Q3 onwards, particularly in banks with balanced retail and corporate mixes.
Investor Takeaway
UBS’s Q2 insights signal broad resilience across Indian lenders with stable asset quality and recovering deposit momentum. While Avenue Supermarts’ moderation may cap near-term retail optimism, the overall macro backdrop supports continued investor interest in well-capitalized banks and diversified NBFCs.
For more institutional-level equity coverage and strategic commentary, explore detailed insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
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