This is why there is still potential for a surge in banking stocks3 min read 24 May 2023, 01:38 PM IST
With the stabilization of deposit rates, it is anticipated that Net Interest Margins will be more sustainable. That combined with other factors will drive bank stock prices. Read on:
In the fiscal year 2023, the banking sector experienced strong credit growth, with a YoY increase of approximately 17%. However, the growth rate of deposits was slower, at around 11% YoY. In order to maintain an adequate Credit Deposit Ratio (CDR) and a regulatory Liquidity Coverage Ratio (LCR) of 100% of High-Quality Liquid Assets (HQLA), banks need to focus on increasing deposit mobilization. Currently, there is intense competition among banks to expand their deposit base.
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