New Delhi, Dec 27 (FN Bureau) Maintaining positive outlook on India’s banking sector, research and rating firm ICRA on Wednesday said that credit growth would remain healthy at 12-13% in FY25 driven by strong demand in the services and the retail segments. “ICRA maintains its positive outlook on the banking sector, driven by comfortable asset quality levels, with both corporate and retail portfolios performing well in terms of delinquencies, resulting in limited net-NPA (non-performing asset) additions,” it said.
The rating firm expects the operating profits for banks to remain steady supported by the loan growth, however, operating profitability levels would witness a mild moderation and stabilise at 1.8-2.0% in FY2024-FY2025 compared to 2.2% in FY2023. “Incremental credit expansion has been robust so far at Rs.15.5 trillion (for FY2024 till December 1, 2023), against Rs.18.2 trillion in FY2023. However, as we look beyond this year, credit growth is likely to come off as tight liquidity conditions would eventually weigh down on growth,” said Aashay Choksey, Vice President, ICRA. ICRA expects the gross NPAs (GNPAs) and the net NPAs (NNPAs) to decline to 2.1-2.5% and 0.5-0.6%, respectively, by March 2025 from 2.8-3.1% and 0.7%, respectively, expected as on March 31, 2024 (GNPA and NNPA at 4.0% and 1.0% respectively as on March 31, 2023).