India: Mounting interest rates, bad loans dim outlook
India saw 49 banks ranked in the 2011-2012 AB500 with assets totalling $1,334 billion and net profits totalling $12.6 billion, however escalating interest rates and bad loans may weaken the financial growth of its banks. October 11, 2011 | ResearchAs one of the world's fastest developing economies, India has been on a tremendous growth trajectory. Although consecutive quarterly GDP figures in the first half of the year have fallen slightly below expectations, the average growth rate of around 7% remains highly impressive among Asian economies. Driven by strong numbers across all of India's key fundamental indicators, major banks have so far been able to maintain a forward momentum. In the quarter ending June, State Bank of India posted a YoY net profit surge of 25.3% on a consolidated basis. ICICI Bank and HDFC Bank similarly saw their quarterly profits rise 30% and 34% respectively in the same period, with Bank of Baroda also reporting a 20% increase in its April-June net profit. Table 1. Largest Indian banks by asset Please click to view enlarged image These numbers, and the potential of growth they suggest must, however, be viewed with care. With the country's regulatory landscape and economic outlook dimmed by mounting inflation, high interest rates and accumulating restructured loans, Indian banks are facing challenges in maintaining their impressive balance sheets as they brace themselves against the looming possibility of a global recession. Figure 1. Indian banks are light on reserves Please login to read the complete article. If you already have an account, you can login now or subscribe/register. Categories: Asia Pacific, Asian Banker 500, Databook, Indiaasia pac,Asian Banker 500,Databook,India, Asia Pacific,Asian Banker 500,Databook,India, Keywords:State Bank Of India, HDFC Bank, ICICI Bank, KV Kamath, GDP, Inflation State Bank of India, HDFC Bank, ICICI Bank, KV Kamath, GDP, Inflation
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