The chart shows that restructured assets went up sharply for most banks in the fourth quarter of 2011-12. Moreover, there is still a large pipeline of loans waiting to be restructured, the impact of which will be felt in subsequent quarters.
Citigroup analysts argue that while at first glance price-to-book ratios of government banks seem attractive, they are not so low after the book value is adjusted for stress assets. Asset deterioration is expected to continue at a moderate pace for the next two quarters and then start reversing. Banks being a play on the economy, everything depends on whether growth revives soon.
Also See | Chart of the Day (PDF)
Graphics by Naveen Kumar Saini/Mint
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