Amid questions on the depleting loan-to-deposit ratio in Indian banks, a recent report by Motilal Oswal, a financial service company suggests that the loan-to-deposit (LD) ratio is likely to subside on its own in the coming months.
The gap between credit growth and deposit growth at Indian banks is largely driven by households shifting their savings to relatively high-return investments, said Tusharika Aggarwal, a dividend forecasting research analyst at S&P Global Market Intelligence.
The credit growth in the Indian banks will continue to be more than the deposit growth, a report by the 'Axis Securities' has said while also noting that bank deposit growth will pick up in the coming quarters.
A research report by the State Bank of India (SBI) highlights the continuous upward trend in credit growth in Indian banks, which is outpacing the growth of deposits.
After suffering from seething government and disturbing bad loan difficulties, Indian banks have established themselves in a much stronger position, as balance sheets and profits have rebounded markedly, noted CLSA (formerly known as Credit Lyonnais Securities Asia), a capital markets and in
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.
Bank credit growth is expected to moderate 200 basis points (100 basis points is equal to 1 percentage point) to 14 per cent this year after an estimated robust growth of 16 per cent last financial year, according to Crisil Ratings.
Asset quality pressures are subsiding at Indian banks, creating a favourable business environment and bolstering banks' potential and appetite for growth, said Fitch Ratings on Monday.
Three Indian lenders made it to the list of top 50 banks by assets in the Asia-Pacific region in 2023, up from two in 2022, according to a report by S&P Global Market Intelligence.
The ratings agency affirmed various credit ratings for these institutions, signaling confidence in their financial stability despite ongoing economic challenges.
According to Fitch, while net interest margins (NIMs) are anticipated to narrow by 10 to 20 basis points over the next two years from the current cyclical peak of 3.6 per cent in the nine months of the financial year ending March 2024 (9MFY24), the sector's earnings resilience will persist.
Profitability of Indian banks is likely to continue to improve, although net interest margin (NIM) compression will limit earnings upside over the medium term, according to Fitch Ratings.