large scale image
LCP Image

Back to TSCFM News

Banking sector’s financial performance to improve gradually

February 25, 2022

Banking sector’s financial performance to improve gradually

Fitch Ratings expects the Indian banking sector’s near-term financial performance to improve gradually amid the economic momentum and regulatory forbearance on pandemic-led stress.

The global rating agency assessed that private banks would lead the recovery with faster loan growth than state banks, which may find it difficult to remain competitive without adequate growth capital.

The agency noted that a stronger economy and extended government relief should also boost Indian non-bank financial institutions (NBFI) performance. Still, asset-quality risks persist, while higher interest rates will pressure net interest margins.

“India’s economy is rapidly recovering from the Covid-19 pandemic and financial-sector pressure appears to be easing.

“However, the Negative Outlook on the sovereign’s ‘BBB-’ rating reflects lingering uncertainty over the medium-term debt trajectory, particularly in light of India’s limited fiscal headroom relative to rating peers,” Fitch said.

In December 2021, the agency had forecast India’s GDP growth of 8.4 per cent in FY22 and 10.3 per cent in FY23.

Fitch has a neutral outlook on the Indian banking sector in 2022 as it expects a gradual improvement in the banks’ financial profiles in the near term.

Important Links:

Recommended for you ...

Modi, Mauritius, and Sri Lanka Leaders Unveil Digital Payment Services
Modi, Mauritius, and Sri Lanka Leaders Unveil Digital Payment Services

February 12, 2024

Public Sector Banks Surpassing Private Peers, Investors Reconsidering Choices
Public Sector Banks Surpassing Private Peers, Investors Reconsidering Choices

February 12, 2024

Indian Banks Seek RBI Permission for Global Bond Trading Ahead of Inclusion in Indices
Indian Banks Seek RBI Permission for Global Bond Trading Ahead of Inclusion in Indices

February 12, 2024

Enquire Now
REQUEST A CALLBACK
Chat on WhatsApp