Public, private banks NPA ratio may jump to 4.5 per cent by March: Care Ratings
Mumbai: Gross non performing assets (NPAs) ratio of domestic banks will increase to 4.5 per cent by March 2014 and impact profitability by up to 30 per cent, Care Ratings said on Wednesday.
"Deterioration in asset quality continues to be the major factor impacting profitability of banks in the near future," the rating agency said in a report, adding that a higher proportion of the NPAs will come from state-run lenders.
It said the overall NPA ratio will move up to 4.5 per cent by the end of March, 2014 from 3.98 per cent in September, 2013. The agency's survey included all the 26 state-run banks and 14 private sector ones.
With a rise in restructured assets, which touched Rs. 3.6 lakh crore from March 2013's Rs. 3.4 lakh crore, banks will have to provide more due to a change in provisioning norms by the Reserve Bank of India (RBI), it said. "These factors would exert downward pressure on margins and are likely to impact profits for FY14 by around 25 per cent to 30 per cent." State-run banks are under more pressure and will see their overall NPA rise further to 5 per cent from 4.47 per cent in September, it said.