Indian banks' performance till Dec 22 exceeds expectations: Fitch Ratings

The pace at which the asset quality and profitability of Indian banks have improved has exceeded expectations, while capital buffers are broadly in line with Fitch Ratings' projections. There is a further upside in performance and this could persist for longer than expected, according to the agency.

The sector's impaired-loan ratio declined to 4.5 per cent in the first 9 months of FY23 (9MFY23), from 6.0 per cent at FY22. This was nearly 60 basis points below Fitch's FY23 estimate.

Increased write-offs have been a key factor, but higher loan growth, supported by lower slippages and improved recoveries, have also