Nitin Bhasin, Co-Head and Head of Research, and Pankaj Agarwal, Analyst (Banking & Financial Services) at Ambit Institutional Equities
Contrary to fears, the Indian banking sector has emerged largely unscathed from the COVID crisis. In fact, the sector is going through one of the best phases during the last decade with accelerating credit growth and falling non-performing assets (NPAs).
Acceleration in credit growth across the board
Credit growth has been accelerating for Indian banks over the last year with YoY credit growth hitting a 10-year high of 15 percent in August 2022. We expect the credit growth for the sector to sustain going forward due to (i) Broad-based nature of the growth; (ii) some market share shift from corporate bonds to banks; (iii) increasing capacity utilisation/capex in the manufacturing/industrial sector.