The fiscal year FY24 is expected to witness a positive trend in the profitability of banks, even though the growth rate may vary in percentage terms due to robust projections for the loan book’s expansion.
ICRA experts, a reputable rating agency, anticipate that Public Sector Banks (PSBs) will maintain a strong overall profitability exceeding Rs. 1 lakh crore (US$ 12 billion).
During a recent webinar, analysts from the agency reiterated their optimistic outlook for the banking sector. They anticipate that the sector’s loan portfolio will continue to experience substantial growth in FY24, which will consequently boost earnings.
Furthermore, lower credit costs are expected, thanks to improved asset quality. Gross non-performing assets (GNPAs) and net non-performing assets (NNPAs) are predicted to decline from 3.96% and 0.97%, respectively, as of March 31, 2023, to a range of 2.8-3.0% and 0.8-0.9%, respectively, by March 2024. Analysts view this as the sector’s strongest performance in over a decade.
In addition, the banking industry is projected to generate sufficient internal capital to meet its growing capital requirements in the foreseeable future. This reinforces the positive outlook for the sector’s financial stability.
