New Delhi:
S&P Global Ratings said today that Indian banking sector profitability will stabilize at healthy levels and asset quality will continue to improve.
“Indian bank earnings are likely to remain healthy. The industry has improved significantly over the past seven years after a period when many public sector lenders struggled with bad loans,” said S&P Global Ratings credit analyst Deepali Seth Chhabria.
A strong recovery is underway in India’s banking sector and lenders have just reported their best performance in a decade, according to S&P Global Ratings. It expects the sector’s profitability to stabilize at a healthy level and that the quality of banks’ assets will continue to improve.
Indian banks’ profitability is benefiting from higher net interest margins and lower credit costs.
We estimate a system-wide return on average assets (ROAA) at 1.2 percent for fiscal 2023 (year ended March 31, 2023). System-wide ROAA is likely to hover around 1.1 percent in fiscal 2024.
“New non-performing loan formation will remain at cyclical low levels despite pressure from higher interest rates,” said S&P Global Ratings credit analyst Geeta Chugh.
“A recovery of debited accounts also increases banks’ profitability,” she added. India’s strong economic performance strengthens the banking sector.
S&P Global Ratings still forecasts that the country will grow at an annual rate of 6-7 percent at least until 2026, making India the fastest growing economy in Asia Pacific and the fastest growing major economy in the world.
(Except for the headline, this story has not been edited by DailyExpertNews staff and is being published from a syndicated feed.)