Key Points
Bank credit growth is expected to remain healthy at 12-13 per cent in the next fiscal, rating agency ICRA said while maintaining a positive outlook on the banking sector..
"Furthermore, credit growth is expected to remain healthy at 12-13 per cent in FY 2025 (16.5 per cent YoY as on December 1, 2023 and 15.4 per cent in FY2023), driven by strong demand in the services and the retail segments," it said...
"Despite this, we expect the operating profits for banks to remain steady supported by the loan growth, however, operating profitability levels would witness a mild moderation and stabilise at 1.8-2.0 per cent in FY2024-FY2025 compared to 2.2 per cent in FY2023," it said.. Aashay Choksey, Vice President, ICRA said that incremental credit expansion has been robust so far at Rs 15.5 lakh crore (for FY2024 till December 1, 2023), against Rs 18.2 lakh crore in the last financial year...
"However, as we look beyond this year, credit growth is likely to come off as tight liquidity conditions would eventually weigh down on growth," he said.. Besides this, Choksey said factors including weaker credit demand in the agriculture segment, subdued export demand as well as the recent increase in risk-weights to the unsecured consumer lending & the NBFC segments would also collectively temper credit traction...
Total number of downgrades as a ratio of total number of ratings (upgrades + downgrades + stable) across three major credit rating agencies -- ICRA, CRISIL and CARE -- remained stable or declined in the first and second quarter of 2023-24 relative to the corresponding quarters of 2022-23...
