SBI, Axis, ICICI Bank All the banking stocks including SBI have been on a rise for a long time. SBI’s stock has given a great return of 47% in one year. Axis Bank’s stock has given a return of 22% and ICICI’s stock has given a return of 20%. Talking about small government banks, they have got bumper returns. What is the reason that banking stocks are on a rise? Actually, the profit of Indian banks has increased 4 times in the last 10 years.
Along with this, a big decline has been observed in the number of bad loans. This information has been given in the report of investment group CLSA. The effect of increasing profits and decreasing NPA is being seen on banking stocks. Therefore, the boom continues. Market experts say that this boom is expected to continue in the future as well.
The balance sheet of banks has become stronger
The report said that the balance sheet of Indian banks has strengthened significantly in the last decade and profits have increased fourfold. The report said that non-performing loans (net NPL), which was earlier a major burden on the Indian banking sector, have come down significantly in the last decade. This has significantly improved the asset quality and the capital position of banks has also become very good. The deposit growth rate should be the same as the loan growth rate. It has increased from an average of 10 percent to 15 percent in the last two years during FY 2012-22.
Public sector banks outpaced private banks
The report said that in the last five years, public sector banks have performed much better than private banks. However, in the last decade, private banks have overtaken public sector banks in terms of current account and non-deposit lending has also declined.
Loan growth rate increased
The CLSA report also said that loan growth in the sector has risen from its decadal average of 10 per cent to 15 per cent in the last two years due to some diversions across all sub-segments and possibly from corporate bond substitution. Loan growth and deposit growth have been in sync over a long period of time. The quality of corporate credit has improved in the last 5 to 7 years.
Input: IANS
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