reserve Bank of India With rates now hiked by a total of 190 basis points since its first unscheduled mid-meeting hike in May, further hikes are likely on the cards.
Moody’s said in a note on Wednesday that while India’s economic growth will slow, its growth outlook was better than that of its peers.
The rating agency said that due to increase in yields, the profitability of banks will also reduce their share of government securities.
It said, “NIM (net interest margin) will increase but only around 15-25 basis points, due to hike in interest rates.”
Moody’s said tight liquidity conditions will force banks to raise their deposit rates at a faster rate than lending rate hikes, while competition for higher-quality borrowers will also curb lending rates hikes.
The agency also added loans to small and medium-sized enterprises – most vulnerable to high cost of capital – will see asset quality decline, although corporate and retail loans will remain largely stagnant.
Separately, an S&P Global Market Intelligence report found that Indian banks outperformed their Asia-Pacific counterparts, with the highest total returns in the quarter ended September 30, strong financial metrics and promising growth prospects backing their stocks. does.
nifty bank The index climbed 15.6% in the third quarter, relaxing 8.3% rise in the blue-chip Nifty 50 index.