Indian banks’ profitability weaker than BRICS peers, to improve next fiscal: Moody’s

Moody’s Investors Service Monday said the profitability of Indian banks is distinctively weak compared to those in BRICS nations, but it will improve from next fiscal as asset quality stabilises On capitalisation, Moody’s said it is the weakest for Indian banks with a tangible common equity ratio of 8.7 per cent at the end of 2017. System wide asset quality in India is weak due to stressed public sector banks, which dominate the sector. Government capital infusions will boost weak public sector banks’ capital ratios, it said. By contrast, Brazilian and SouthAfrican banks have the highest return on assets (ROA). The Moody’s report on banks in BRICS countries said Indian lenders had the second highest non-performing loan (NPL) at 2017-end, followed by banks in Brazil, South Africa and China. Russian banks had the highest ratio of 11.8 per cent.

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