A major decline will be faced in Indian Banks capital: Moodys Investors

by Psu Connect
Date: 30-11-20

The 2021 outlook for banks in emerging markets is negative, while the outlook for insurers is stable

New Delhi: Talking about Indian Banks capital Moody's Investors on Monday said that the bank capital will moderately fall in emerging Asia over the next two years, with India seeing larger capital decline without further infusion.

One of the biggest threats for emerging market banks is the uncertain trajectory of asset quality which will be a challenging condition amid the current pandemic, moody's states on the report. "The 2021 outlook for banks in emerging markets is negative, while the outlook for insurers is stable, it said."

"In the Asia Pacific region, banks' rising nonperforming loans and insurers' volatile investment portfolios are in focus. Capital will moderately fall in emerging Asia over the next two years, and banks in India and Sri Lanka will post larger capital declines without public or private injections," Moody's said.

There will be an increment in the NPLs for banks in India and Thailand due to the greater shock to their economies and historically poor performance of certain loan types. There is more stress among the NBFs which will tend to shrink their capacity to lend, it said.

"Profit growth will be modest because of low-interest rate and subdued lending, but lower loan volumes should aid capital," Moody's Managing Director Celina Vansetti-Hutchins said in the 'Emerging Markets Financial Institutions Outlook' report.

A major decline will be faced in Indian Banks capital: Moodys Investors

The 2021 outlook for banks in emerging markets is negative, while the outlook for insurers is stable

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