*Licensed Commercial Banks NPL ratio up in 1Q 2023 to 12.9% from 11.5% in 4Q 2022* The economic downturn in 1Q 2023 hit badly on the banking sector as the non-performing loan ratio has elevated to 12.9% from that of the previous quarter's 11.5%. The moratorium offered during the pandemic era ended in Jan 2023 and many sectors are still struggling to recover has put banks in a bad position. Interest rate reduction by CBSL would take more time to pass through to the economy, as banks will be reluctant to reduce their lending rates and increase the loan and advancers under prevailing conditions. -charts.lk #BankingSector #FinanceInsights #FinanceNews
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The economic downturn in 1Q 2023 hit badly the banking sector as the NPL ratio has elevated to 12.9% from the 4Q 2022 11.5%. The moratorium offered during the pandemic era ends n Jan 2023 and many sectors are still struggling which has put banks in trouble https://lnkd.in/gej6WsCE
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The economic downturn in 1Q 2023 hit badly the banking sector as the NPL ratio has elevated to 12.9% from the 4Q 2022 11.5%. The moratorium offered during the pandemic era ends n Jan 2023 and many sectors are still struggling that has put banks in trouble https://lnkd.in/gVFUVVy4
Licensed Commercial Banks NPL ratio up in 1Q 2023 to 12.9% from 11.5% in 4Q 2022
charts.lk
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The economic downturn in 1Q 2023 hit badly the banking sector as the NPL ratio has elevated to 12.9% from the 4Q 2022 11.5%. The moratorium offered during the pandemic era ends n Jan 2023 and many sectors are still struggling which has put banks in trouble https://lnkd.in/gPWGZJTj
Licensed Commercial Banks NPL ratio up in 1Q 2023 to 12.9% from 11.5% in 4Q 2022
charts.lk
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Rising non-performing loans at banks is pushing their market price-to-book value ratio to pre-pandemic lows. The average NPL of the banking sector came in at 3.62% in the third quarter ended mid-April. And market prices of bank shares are trading at an average PB ratio of 1.31, the level not hit since the pandemic slammed into the world https://lnkd.in/e7ycNSmi
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I would like to avoid such banks or lenders. DCB Bank is looking to double its book in every 3-4 years. The growth guidance is good but if the ROA won't touch 2% it shows the inefficiency of the business model. And then it puts a question mark on the overall sustainability of the earnings of such lenders. They are also expecting sharp fall in margins from 4.20% to 3.65-3.75%. I want my lender to deliver 2%+ ROA and more than 15% ROE without compromising much on margins.
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As per RBI data, unsecured credit such as personal loans and credit cards form 25% of the 41 lakh crore rupees of retail credit as of March 31. Lenders need to be careful. In an interview with ET Prime, Saswata Guha said that unsecured loans are a vulnerable segment with low-to-negligible recovery potential in the event of losses. Lenders need to be cautious. "A booming economy and rising aspirations can lead to a higher propensity to spend, and then with products like BNPL (buy now, pay later), which are easily available, it could lead a borrower down the path of a potential debt trap. I believe it is such borrowers that require close vigilance — ones that might get missed by early-warning indicators because they appear creditworthy but may cease to be so once they exceed a certain debt threshold," he said. #banks #personalloans #creditcards #bnpl #fintech https://lnkd.in/dVknAcdV
Middle-income borrowers are more prone to overleveraging: Fitch Ratings’ Saswata Guha
economictimes.indiatimes.com
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Banks are significantly upping lending to risky NBFCs, forcing RBI to sound an alarm, writes Prasanna Mohanty #NBFC #FinancialStability #WillfulDefaulters #NPAs #CIBILDatabase #BankBorrowings #BadLoans
NBFCs Add Risk To Slowing Economy
fortuneindia.com
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City Union Bank Q3FY24 Con Call Insights: > Lacks growth in the loan book. The bank is growing at a lower pace than growth in system credit. They target growing 12-15% YOY in FY24. > The management attributes lack of products like consumer durables, personal loans in its portfolio to be another reason for low pace of loan book growth. > The bank faced divergence issue with the RBI last year and has been dealing with poor asset quality ever since Covid. > The management expects to get asset quality to pre-Covid levels in the next few quarters.
