Indian banks posted some of the best total stock returns among their Asia-Pacific peers for the final quarter of 2022, according to a report by S&P. They have benefited from a pickup in credit growth, improving asset quality on the back of a growing economy.
Pre-tax profits at the four biggest banks in India have been increasing steadily for a few years. In 2022, State Bank of India and HDFC Bank recorded more than $6bn in pre-tax profits. ICICI Bank increased the figure by 30.36% to $4.62bn, while Axis Bank reached $2.5bn, growth of 88.23%.
Back in 2015, the government launched an asset quality review to unearth hidden non-performing assets. This has resulted in the strengthening of the Indian banking sector.
The country’s central bank, Reserve Bank of India, published stress tests in December that show a banking system which is well capitalised, capable of absorbing shocks and that would comply with minimum capital requirements even under adverse stress scenarios.
For 2023, the International Monetary Fund projects India’s economy will grow at 6.8%, one of the fastest paces among major advanced and emerging market economies. Global growth is projected to be slightly less than 2%. India is poised to benefit from increasing foreign direct investment thanks to its young population and growing middle class. In particular, it will benefit from China’s growth rate losing steam.
