BackBanks’ dividend payout to hit 7-year high: S&P Global
The growth in dividend payout will be on the back of strong business metrics and healthy credit growth, said the S&P report
PremiumThe aggregate dividend payout by the Indian banks to shareholders in fiscal year 2023-2024 will increase to its highest level in at least seven years, said a report from S&P Global Market Intelligence.
The growth in dividend payout will be on the back of strong business metrics and healthy credit growth, said the report.
Axis Bank, Bandhan Bank and AU Small Finance Bank will lead dividend payout increases in the next few years, Tusharika Aggarwal, a dividend forecasting research analyst at S&P Global Market Intelligence said in the report released on Thursday.’
According to the S&P Global report, banks will likely account for 13% of the aggregate dividend payout across all sectors in the fiscal year 2024 ending March 31, up from 12% and 9% in the previous two financial years.
On accelerating credit growth and shrinking bad loans, banks had reported strong profits last fiscal year and in the first quarter of the current fiscal year.
According to Aggarwal, India's brisk economic activity will likely sustain high credit growth, resulting in excellent earnings forecasts for banks.
An S&P Global report had earlier this month projected India's economy to double to $6.7 trillion by 2031, from $3.4 trillion currently.
On August 17, Fitch Ratings had said that the operating environment for Indian lenders has strengthened as economic risks associated with the Covid-19 pandemic have ebbed.
“India was badly affected by the pandemic, but the associated risks have now receded," the rating agency had said in a report.
“Indian banks’ loan growth over FY23 reached 15.4%, the highest since FY13. We believe this partly reflected pent-up credit demand following the pandemic, amid improved capacity for growth, especially among private-sector banks, as well as strong nominal GDP growth. We expect some normalisation in FY24, although credit demand has remained robust in 1QFY24," it had said.
Fitch affirmed the sovereign rating at ‘BBB-/Stable’ in May and it currently forecasts real GDP growth to average 6.4% annually in the three years to March 2026.
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