Major non-performing bank assets in Mumbai and NPAs, in general, are expected to rise to 10.1-10.6% and 3.1-3.2%, respectively in March 2021, Icra said on Monday.
The organization also expects the full NPA to drop to 2.4-2.6 percent by March 2022.
With the anticipation and also end of the loan suspension over, the respectable High Court ordered the division of assets, GNPAs and NNPA banks are likely to increase in the near future to 10.1-10.6% and 3.1-3.2%, respectively in March. from 7.9 percent and 2.2 percent, respectively from September 2020,
However, it said NPAs as a whole and credit providers would decrease by 2021-22 as banks reported strong securities in their loan portfolio most of which reported more than 90 percent.
The report went on to say that applications for loan restructuring were much lower than previously anticipated, supported by sharper development than expected in economic activities and financial support through the government’s emergency credit guarantee program.
The agency revised its loan restructuring rate to 2.5-4.5% development as compared to 5-8 percent previously estimated.
The anticipation is there for a sustainable collection and small reconstruction, the quality of the asset is expected to improve with the NPA declining to 2.4-2.6 percent by March 2022. This will lead to lower inflation and better profits to FY2022,” said the head of the Icra sector (financial sector estimates). ) said Anil Gupta.
The agency said lending is projected to drop to 1.8-2.4 percent development in 2021-22 from 2.2-3.1 percent in the ongoing fund and 3.1 percent in 2019-20, which will lead to improved repayment. (RoE) of banks.
Public sector banks are expected to break after six consecutive years (FY 2016-FY 2021) and produce an RoE of 0.0-5.4 percent FY2022 (2.3 percent / 3.7 percent FY2021 and 5 percent -6.5 FY2020).
Private banks ROE is also projected to improve to 9.5-10.5% in FY2022 (2-7.5% in FY2021 and 6.5% in FY2020).
The financial position of the major private banks is strong and can withstand the pressure on the quality of assets after these banks raised Rs 54,400 million in the 9th month of FY2021.
With rising inflation and improved profit prospects, banks have been well-positioned to make use of call options at Rs 26,000 crore AT-I bond collapsed due to subsequent financing with FY2023 without significant impact on their capital, the report said.
Gupta said public sector banks would need to raise additional funds to Rs 43,000 next year as they have phone options that could fall due to AT-I obligations amounting to R23,300 in 2021-22. The organization went on to say that lower prices, improved business prices, better job opportunities, and higher income levels could also boost lending next year. This combined with better competitiveness of banks in view of other lenders driven by a significant reduction in deposit costs could boost bank lending growth to 6-7 percent in the next amount from 3.9-5.2 percent in 2020-21 and 6.1 percent in 2019-20.