Better show beckons banks in '15 - The New Indian Express

Challenges for the Indian banking system are likely to increase in the next 12 months due to slow economic growth and sluggish fiscal reforms. But the situation is likely to improve in fiscal 2015, according to a Standard & Poor's Ratings Services report. S&P had maintained a negative outlook on all banks that it rates in India reflecting a negative outlook on the sovereign rating. Titled, 'India Banking Outlook 2013: More pain but relief might be on the way,' S&P said the asset quality and earnings of banks will remain stressed through fiscal 2014. "We believe deteriorating asset quality and earnings could continue to constrain credit profiles of Indian banks over the next one year," said Geeta Chugh, Primary Credit Analyst, S&P India adding that in the longer term, banks should be able to maintain sound financial health if economic growth and corporate performance improves. The pace of deterioration is expected to decline as economic and corporate sector performance bottom out. The corporate sector's financial performance deteriorated over the past 18 months, largely due to policy issues, regulatory uncertainty and weak demand leading to restructuring of loans as well as higher corporate defaults. "We expect that the credit cycle is at a turning point and believe that banking sector performance is likely to start improving starting fiscal, 2015," Geeta said. Banks' customer deposit base will continue to provide them with access to stable funds. However, deposit growth has slowed down in recent years due to falling real interest rates on deposits amid rising inflation. via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNHSfDhC0Uy7Tdr3e89b83JMDV_q-g&url=http://newindianexpress.com/business/news/article1479038.ece

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