New Delhi ,may 29
India’s largest banks are poised to improve their asset quality in the current fiscal year, bolstered by record net incomes that will enable them to enhance their balance sheets and underwriting standards, according to an analysis by S&P Global Market Intelligence.
The cumulative nonperforming loans (NPLs) of India’s three largest private and three largest public banks fell to 2.483 trillion Indian rupees in the 12 months ending March 31, marking an 11 per cent decrease from the previous year’s Rs 2.791 trillion.
This improvement occurred despite a 56.8 per cent increase in HDFC Bank Ltd.’s NPLs to 311.73 billion rupees following its merger with Housing Development Finance Corp. Ltd.All major Indian banks reported record profits for the fiscal year ending March 31, driven by strong lending growth and enhanced asset quality.The State Bank of India (SBI), the country’s largest bank by assets, saw a 20.6 per cent increase in net income, reaching 670.85 billion rupees, up from 556.48 billion rupees the previous year.SBI also experienced a 15.2 per cent year-over-year credit growth. HDFC Bank’s full-year income surged by 39.3 per cent to 640.42 billion rupees.
Other major banks, including Bank of Baroda Ltd., Punjab National Bank, Axis Bank Ltd., and ICICI Bank Ltd., also posted record-high net income gains, according to S&P Global Market Intelligence data.
Banks’ overall advances rose during the financial year, and record profits boosted the return on average equity (ROAE).Axis Bank reported the largest ROAE increase, up 997 basis points to 18.50 per cent, while Punjab National Bank logged a 524-basis-point gain to 8.56 per cent.
The average gross nonperforming assets (NPA) ratio of Indian banks is expected to improve to 3.1 per cent by September from 3.2 per cent a year earlier, according to the central bank’s biannual Financial Stability Report.The central bank’s stress test exercise indicated that commercial lenders have sufficient buffers to maintain capital ratios above regulatory minimums even under adverse scenarios.
