Healthy loan book growth likely to drive the profitability of banks in FY24
The profitability of banks is expected to show healthy growth in absolute terms, even if the growth in percentage terms may differ during the fiscal year FY24 due to projections of healthy growth in the loan book.
According to rating agency ICRA experts, the Public Sector Banks (PSBs) are anticipated to maintain their overall profitability above Rs. 1 lakh crore (US$ 12 billion).
In a webinar, the agency analysts reaffirmed a positive outlook on the banking industry amid forecasts that the sector's loan growth in FY24 will continue to be significantly high, driving earnings growth.
Lower credit costs will also be supported by benign asset quality concerns. Gross non-performing assets (GNPAs) and net non-performing assets (NNPAs) are anticipated to decrease from 3.96% and 0.97%, respectively, as of March 31, 2023, to 2.8-3.0% and 0.8-0.9%, respectively, by March 2024. Analysts anticipate that this will be the best performance in more than ten years.
Additionally, it is anticipated that the banking industry will continue to generate enough internal capital to fulfil its expanding capital requirements.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.