Fitch predicts a strong bank mortgage boom in FY23, despite higher interest rates.
Fitch Ratings stated on Monday that India's bank credit will see a strong increase within the current monetary year regardless of the effects of higher interest rates. It said the strong loan growth should benefit net revenue, in particular as it might be coupled with a wider net interest margin.
By Ishika Rastogi
"Bank credit is expected to increase by 11.5 percent in FY23, from 13 percent in FY22.
Fitch said in a statement that the acceleration may be triggered by a normalization of the financial industry following the COVID-19 pandemic as well as high nominal GDP growth, which will boost demand for working-capital and retail loans. In 2022–23, Fitch forecasts India's real GDP growth at 7 percent.
It said Indian banks normally remain open to extra capital-raising to fund booms, no matter the rise in rates.
"Despite opportunistic and incremental equity raising, private banks tend to have larger capital plans than country capital banks."
The rating enterprise expects extra opposition for deposits through the years, for example, through better prices on deposit accounts as banks' liquidity buffers fall in their pursuit of loan increases.
As for the current and next fiscal years, Fitch expects system deposits to grow at a slower rate than loans, at 11 percent. "Banks may be affected by extended deposit charges as well, but falling credit prices, such as better investment charges, should offset any pressure on profitability," according to the report.