This weekend saw several banks report quarterly results, with the emerging picture looking bright. Net profit surged: Kotak Mahindra Bank’s surged 26% from a year earlier in the April-June quarter, Axis Bank’s 23%, Yes Bank’s 34% and ICICI Bank’s 16%.
Among the not so spectacular results were those of HDFC Bank and IDBI Bank, both of which saw net profit rise 5%. What seems to stand out is the quarter’s healthy expansion in loans extended by banks—gross advances grew 15% and 20%, respectively, for HDFC Bank and ICICI Bank, for instance.
Meanwhile, the ratio of bad loans to total advances stayed low all across. Overall, the sector appears to be doing well. Corporate clients taking more loans could be a signal of investment in the economy gaining momentum. Other signs of it exist too. If so, India’s economy might be broadening its base of drivers.
If so, India’s economy might be broadening its base of drivers. An emerging concern, though, has been an uptrend in retail loans that risks inducing stress points in the credit market beyond a point. To mitigate this risk, household incomes must rise faster. More money needs to reach people’s hands, even as capital investors are rewarded, and convincing evidence of that is awaited.