Will drive pickup in activity levels credit enhancement“With a positive impact of asset risks,” the global rating company said in a report on emerging market banks.
Report commends India’s rise Vaccination The selective use of rates and restrictions helped in improving economic activity.
“Stable asset quality backed by gradual recovery in the job market and better corporate exposure will help reduce credit costs once economic activity normalises,” it said, adding that policy support for borrowers would improve asset quality. will limit the fall.
The report forecasts a stable outlook for banks across the emerging market segment, supported by continued improvement in economic activity as well as solid balance sheets of banks, with high levels of credit loss reserves, high profitability, strong liquidity and capital position. This will help mitigate near-term risks.
The stable sector outlook reflects Moody’s outlook on credit fundamentals in the emerging market banks sector over the next 12 to 18 months.
In India, continuous government assistance for public sector banks Will be positive for credit growth in 2022 backed by new equity injections.
“Despite maintaining a lower reserve buffer than private banks, public sector banks can face problem credit growth without destroying their buffers,” the report said.
The rating company, however, emphasized concerns over stressed assets for the country’s small and medium enterprises and retail debt segments. Corporate credit quality is likely to remain stable, with policy support for borrowers limiting asset quality degradation.
Moody’s Associate Managing Director Moody’s Associate Managing Director, emerging market banks will maintain a credit loss reserve buffer created in 2020 that will mitigate the risk of a marginal increase in non-performing loans, following the end of support measures, recent inflationary pressures in the sector and Weak job market Ceres Lisboa said.
“We expect G20 emerging market economies to continue to deliver a solid recovery of 4.8% in 2022 and 4.3% in 2023, with operating conditions reaching pre-pandemic levels in most countries,” Lisboa was quoted as saying.
Meanwhile, Moody’s expects monetary policy tightening reserve Bank of India and LATAM, central banks in Russia and Turkey with clear negative real returns noting increasing pressure on inflation despite downside risks to growth.