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Expressing some cautiousness, domestic rating agency Icra has said that credit growth in the banking system will moderate to 12.1-13.2 per cent in the current fiscal (FY24) from 15.4 per cent in the year-ago period. But, it also said asset quality improvement will continue, while the Gross Non-Performing Assets (GNPA) ratio is expected to come down to 2.8-3 per cent by March 2024, as against 3.7 per cent at the end of the June quarter. Amid the high growth in unsecured credit, it said there is nothing much to be concerned about on the front, and the vulnerable retail book remains low and manageable.
Icra Co-Group Head Anil Gupta termed the credit growth as ‘robust’, despite the slight moderation from the percentage growth perspective, and added that the agency expects the quantum of credit to also be lower at Rs 16.5-18 lakh crore as against the Rs 18.2 lakh crore in the year-ago period. Banks will chase more deposits this year, and the overall deposit growth for FY24 is expected to come at over 9 per cent. This will lead to hikes in deposit rates and will consequentially have an impact on the net interest margin by over 0.20 per cent.
He said this will, in turn, lead to the profitability of the banks being impacted, and added that the return on assets will moderate mildly. He said some banks will prefer to protect profitability, and the improvement in net NPAs at a systemic level will not be as sharp as the GNPAs. Overall, banks’ credit costs will come down as the fresh slippage reduces to under 2 per cent, he said, adding that the quality of the books they are left with after taking care of the legacy bad loans is much better.
The rating agency said it remains cautious about the impact of macro-economic shocks on the asset quality, if these were to materialise. State-run lenders as well as private sector banks will be comfortable on the capitalisation front, the agency said, adding that the government will not have to infuse money into any of its lenders. With general elections coming up next year, Gupta said there is a risk of farm loan waivers, especially in light of deficit monsoon, which needs to be monitored, and added that its estimates do not include the impact of the deficient rains.
MoneyWorks4Me rating and ranking of funds for SIP is available to subscribers only. Moneyworks4Me is not a rating and ranking agency, however it is required that users have a way of selecting funds and building a Portfolio. The method used by it are described below to enable users to understand the logic behind the rating and ranking Subscriber will find more details on this in the various content made available from time to time. In case you need more please write to besafe@moneyworks4Me.com
MoneyWorks4Me rates and ranks mutual funds based on the following data-driven system:
Funds ranking in screeners: Performance Consistency and Quality are two parameters used for ranking funds for SIP. The ranking as follows GG, GO, GR, OG, OO, OR, RG, RO and RR.
With the same color-coded funds, the one with the higher Average 3-year rolling returns (over 5 to 10 years), the number that appears in the Performance tag, ranks higher.
Here is the summary:
The third tag Upside Potential is not relevant for SIP. It is relevant for lumpsum investments in Mutual Funds.
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