Asset quality of banks will worsen by March 2014: ICRA

Posted By: Religare
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Asset quality of banks will worsen by March 2014: ICRA
ICRA reported that the asset quality of the banking sector is set to worsen with gross non-performing assets (NPAs) ratio likely to end at 4.2-4.4 per cent by March-end 2014 from 4 per cent in September 2013, said Hindu Business Line.

ICRA, an associate of Moody's Investors Service, expects the absolute gross NPAs to deteriorate to Rs 2.70-2.90 lakh crore by March 2014 from 2.37-lakh crore in September this year, said the media report.

"Overall, in light of large restructuring seen under CDR (corporate debt restructuring) and other stress factors, standard restructured advances will increase from 5.3 per cent as on March 2013 to 6 to 6.2 per cent by March 2014," said Vibha Batra, Co Head - Financial Sector Ratings, ICRA.

The agency also said that, "Weak accounts (Gross NPAs and 25 per cent restructured accounts) are likely to increase to 5.4-5.6 per cent as on March 2014 from 4.2 per cent as on March 2013.

For public sector banks, profits during FY14 are estimated to be 30-40 per cent lower than in FY13. "However, any increase in base rate or trading avenues for PSBs could offset the pressure on their profitability to some extent," Batra said.

The credit and deposit growth rates are likely to remain subdued at 14-15 per cent and 13-14 per cent, respectively, for the second half of the fiscal year, she added.

Read more about: icra, non performing assets, banks
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