Tag: bloomberg

Four Indian banks have featured among the 20 largest banks in the Asia-Pacific region in terms of market capitalisation in the third quarter of 2021, according to S&P Global Market Intelligence.

HDFC Bank was ranked seventh with a market cap of $119 billion, a quarter on quarter increase of 6.7 per cent while the next was ICICI Bank at 12th spot, with its market cap rising 11.2 per cent quarter on quarter to $65.5 billion.

The State Bank of India rose two spots to 17th on the list as its market cap rose 8.1 per cent to $54.5 billion. Kotak Mahindra Bank‘s market capitalisation rose 17.5%, the highest on the list.

S&P Global’s banking outlook

The global banking sector will continue to slowly stabilize as the economic rebound gains momentum and as support is gradually withdrawn. Should a re-intensification of risks occur, more support from authorities for the real economy would be required. This in turn would help banks maintain a stabilizing trajectory. Strategies and tactics to combat Covid vary enormously across banking jurisdictions. This includes the progress with vaccination campaigns that affects a range of factors, particularly trade and travel.

Corporate default rates will fall from their COVID-19 peak. However, problematic corporate lending and other exposure will likely continue to strain banks’ asset quality metrics, it said.

Some corporate sectors have experienced no credit deterioration, such as grocery and essential retail, and technology software, while other corporate sectors are recovering sooner than previously expected. Still other sectors, however, such as autos, hotels and airlines won’t likely recover until 2023 or beyond, S&P Global said.

With debt levels at or near record highs, some corporates and governments remain vulnerable to credit deterioration and defaults if income recovers more slowly than expected. This is especially if interest rates rise, S&P Global added.

Indian banks’ outlook

Banks are likely to post over 20 per cent jump in profit in the second quarter with analysts expecting a decent sequential improvement in almost all indicators from loan growth to gross bad loan ratios.

According to Bloomberg estimates, for the 19 lenders — five public sector and 14 private banks – profit would grow 21.7 per cent to Rs 32,075 crore in Q2 year on year.

Private banks are likely to report PPoP growth of 9% YoY (3.8% QoQ) and net profit growth of 14% YoY (17.3% QoQ). Earnings are likely to pick up, led by a recovery in business growth / fee income and a gradual reduction in credit costs.

“Loan growth would pick up, led by revival in economic activity and the opening up of the economy. Demand going into the festive season and commentary around the FY22 outlook would be key monitorables. Retail and SME segment is likely to show strong recovery; though growth in the Corporate segment is likely to remain soft and recovery within this segment would be another monitorable,” according to Motilal Oswal Securities.