Asset Quality News

With worn out capital cushions and expected increase stress on asset quality and profitability, PSBs will require ₹45,000-82,500 crore capital even in a scenario of low credit growth of 3-4% during FY21

Public sector banks may be unable to fully adjust risk profiles, given the state’s influence and management instabilityBad loans as a percentage of total loans will trend up due to both higher fresh slippages and lower loan growth

The impact will be more pronounced for PSBs, where the Centre has not proposed any capital infusion for FY21The government had infused ₹70,000 crore into state-owned banks in fiscal 2020

SBI chairman is confident of delivering a return on assets of 1% by FY21 by bringing down credit costs and focusing on borrowers who will behaveUncertainty on asset quality and recoveries is deterring investors from taking a big bite of SBI

Given the poor legacy, valuations are low. The stock is trading at a one-year forward price-to-book of 1.97 timesThe bank’s provision coverage ratio increased to 70.6% as of 30 March, 2019 from 47.7% during same period last year

There have, reportedly, been variances in initial asset quality reviews at different banks for the same assetsAbsence of a mechanism to sell loan assets make it difficult for banks to align their assets and liabilities

With the overhang of bad loans seemingly receding, SBI hopes to grow faster even as it begins to get back money from errant borrowers

HDFC's thrust on affordable housing continues and loan growth is driven by home loans to individuals belonging to the economically weaker and low-income group

Going by the initial results that have started coming in September, it seems that many banks are returning to profit

Committee asked RBI why the early signals of stressed accounts were not captured before the Asset Quality Review undertaken in December 2015