Over the last few quarters, the bank has seen a deterioration in its asset quality, particularly in the corporate segment. Tight refinancing conditions for borrowers were a key trigger for the crystallization of nonperforming loans (NPLs), the agency said.
was the top loser on the Nifty Private Bank index. That apart, HDFC Bank, City Union Bank, ICICI Bank, Federal Bank, Axis Bank, Bandhan Bank, RBL Bank, and IDFC First Bank hit their respective 52-week lows, down in the range of were down 4 to 8.6 per cent on the NSE. At 11:00 am, the benchmark NIfty50 index was at 7,684.60 level, up nearly a per cent. Nifty Private Bank index, on the other hand, was trading 0.5 per cent lower, having slipped 5.4 per cent in the intra-day trade.
The outbreak of coronavirus
(Covid-19) has raised fears of fresh bad loan wave as small businesses are likely to default owing to demand disruption. Adopting a cautious approach amid the worldwide outbreak, foreign portfolio investors (FPIs) have already pulled out a net Rs 62,612 crore from the Indian capital markets
in the past one month, exchange data show.
Analysts at JP Morgan believe the current conditions call for a potential "force majeure" and the regulators will likely need to allow for a "moratorium" on retail and micro, small & medium enterprises (MSME) loans.
Whilw those at JM Financial Institutional Securities expect the earnings trajectory across the sector to moderate on the back of lower balance-sheet growth, which is usually accompanied by pressure on net interest margins (NIMs).
“We continue to favour larger banks with better economies of scale, strong liability franchises and lower exposures to weaknesses in mid-corporates and small and medium enterprises (SMEs),” the brokerage firm said in sector update.