Valuations of banks could go up in 12 months: Morgan Stanley's Anil Agarwal

The challenge for wholesale-funded institutions whether it's a bank, non-bank or housing finance company, is that they cannot lend because they are struggling with liquidity, says Anil Agarwal

The recapitalisation of Rs 70,000 crore announced in the Budget is expected to take care of regulatory and growth capital requirement of PSBs. ANIL AGARWAL, head of Asian (ex-Japan) financial research, Morgan Stanley, tells Shreepad S Aute that reduction in NPAs will support banks’ margins. Edited excerpts:

What makes you positive on big banks such as Axis Bank, ICICI Bank, and State Bank of India?

Last year, our call was that asset quality outlook will improve and will drive stock performance. Valuations are now above the long-term average. Non-performing loans (NPLs) are slightly below expectation; that is not going to move the