Economic recovery, fewer NPAs to drive banks' re-rating in 2021: Analysts

With corporate asset quality cycle behind and Covid-19 impact fairly contained, analysts at Nomura think front-line banks will see faster-than-expected return on equity (ROE) recovery in 2021

Weathering the Covid-19 pandemic better-than-expected, nursing their balance sheets, and gaining meaningful market share, large private banks and financial institutions are likely to enter a ‘golden age’ in 2021, analysts say. 
 

Private lenders strengthened their capital, built excess provisions, improved liquidity positions, and increased digital adoption to come out strong from the Covid-19 crisis. A combination of these factors, analysts at Morgan Stanley say, will help them gain rapid market share and materially lower cost to income ratios over the next few years.
 

"The macro recovery trends have sustained, and collection efficiency in stressed segments is also improving. The extension