S&P Global Ratings projects robust credit growth, profitability, and asset quality for Indian banks in the current fiscal year, reflecting strong economic expansion. However, banks may need to temper their loan growth as deposit growth lags behind, particularly in retail deposits. Director SSEA Nikita Anand anticipates a moderation in credit growth to 14% in FY25, down from 16% in FY24, if deposit growth remains subdued. The loan-to-deposit ratio has deteriorated in every bank, prompting the need for alignment between loan and deposit growth to avoid higher funding costs and maintain profitability. Private sector banks lead in loan growth at 17-18%, while public sector banks hover around 12-14%.
S&P Global Ratings Forecasts Indian Banks to Adjust Loan Growth to Match Deposits
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