Bank credit growth may pick up in the current financial year, says ICRA
Mumbai:
Rating agency ICA Ratings on Tuesday said the outlook for banks is expected to remain stable amid improving credit growth to 8.9-10.2 per cent in the current fiscal and a fall in provisions.
Gross Non-Performing Advances (GNPAs) of banks are expected to decline to 5.6-5.7 per cent by March, 2023, as against the estimates of 6.2-6.3 per cent by March, 2022.
“ICRA Ratings expects the outlook for banks to remain stable in FY13, with better credit growth of 8.9-10.2 per cent in FY13 (8.3 per cent (expected) for FY12 and 5.5 per cent in FY2011). Based on continued improvement in earnings. in credit provisions,” the agency said in a report on Tuesday.
Credit growth will come from non-food segment lending driven by retail and MSME sectors, and partly by co-lending arrangements with non-banking finance companies (NBFCs). In the wholesale credit segment, growth will be supported by a shift in demand for bank credit from the debt capital market, as seen in FY19.
The agency expects Treasury earnings to fall sharply during FY13 in a rising bond yield scenario.
“In terms of asset quality, gross non-performing advances are expected to decline to 5.6-5.7 per cent by March, 2023 as against 6.2-6.3 per cent by March, 2022, while net non-performing advances will decline 1.7-1.8 per cent as against the estimate of 2 per cent by March 2022,” said Anil Gupta, vice-chairman of the agency.
Loans and other provisions are expected to decline by 1.3-1.4 per cent in advances in FY12 as compared to 1.7-1.8 per cent estimated in FY12.