Banks with significant exposure to infra could be hit badly; prefer HDFC Bank on retail portfolio: Hemindra Hazari

In a chat with ET Now, market expert Hemindra Hazari shares his views on public sector banks following the less-than-expected numbers from the largest PSU lender State Bank of India (SBI).

ET Now: We saw the tide changing for the PSU lot, especially since some of the smaller ones came out with the decent asset quality data. But will this tide reverse following less-than-expected numbers from SBI? Will you recommend long on private banks and a ‘blanket sell’ on PSU banks?

Hemindra Hazari: You must understand that the PSU banking space has taken the burden of financing infrastructure. If PSU banks had not finance infrastructure, boom in the Indian economy would not have taken place.

The financing to infrastructure sector has hit PSU banks as a lot of infrastructure projects are stuck.

There have been few PSU banks which did not go into infrastructure lending. One of them is Syndicate Bank.

Lenders such as Punjab National were too aggressive in lending to infrastructure sector. Even SBI has significant exposure to power sector. So, banks with significant infrastructure portfolio are going to get extremely badly hit. There are some new private sector banks also which have infrastructure exposure, but we have not seen any impact on them till date.

But they too will get impacted. Therefore, you are going to probably have lenders like an HDFC Bank, which have more retail exposure than others. Eventually, all of them get hit if the slowdown in the economy persists.