Moody’s negative on India banks
6 Dec 2012 3:47 AM IST
Moody's on Tuesday said its outlook on Indian banks remains negative as asset quality may further deteriorate, leading to decline in profitability due to slow economic growth and high interest rates.
Moody’s Investors Service said, ‘Our outlook on the Indian banking system for the next 12-18 months remains negative as it has been since November 2011, reflecting the continued challenging nature of its domestic operating environment.’
Moody’s rates a total of 15 public and private sector banks, which together accounted for 66 per cent of the banking system’s total assets in March 2012. The agency said that the banks’ average standalone credit strength is D+, or ba1 on the long-term rating scale. Their average foreign currency long-term deposit rating is Baa3, which is investment grade. Moody's said India's environment is characterised by slow economic growth, high inflation, high interest rates and a weak local currency.
‘...We expect these factors to lead to further deterioration in asset quality, an rise in provisioning costs, and a fall in profitability,’ said Moody’s Vice President and Senior Analyst Vineet Gupta.
Moody’s Investors Service said, ‘Our outlook on the Indian banking system for the next 12-18 months remains negative as it has been since November 2011, reflecting the continued challenging nature of its domestic operating environment.’
Moody’s rates a total of 15 public and private sector banks, which together accounted for 66 per cent of the banking system’s total assets in March 2012. The agency said that the banks’ average standalone credit strength is D+, or ba1 on the long-term rating scale. Their average foreign currency long-term deposit rating is Baa3, which is investment grade. Moody's said India's environment is characterised by slow economic growth, high inflation, high interest rates and a weak local currency.
‘...We expect these factors to lead to further deterioration in asset quality, an rise in provisioning costs, and a fall in profitability,’ said Moody’s Vice President and Senior Analyst Vineet Gupta.
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