Indian banks posted some of the best total stock returns among their Asia-Pacific peers for the second consecutive quarter as they continued to benefit from solid financial metrics, a resurgent equities market and growth prospects for the country’s economy.
Healthy credit growth along with stable asset quality will support profitability, the Nifty Bank index, which represents the 12 most liquid and large capitalized bank stocks that trade on India’s National Stock Exchange, rose 21% in 2022, outperforming the broader benchmark Nifty 50 index’s 5% gain.
Indian banks have benefited from a pickup in credit growth and improving asset quality as the country’s economy continues to consolidate a recovery. The results of a recent Reserve Bank of India stress test show that Indian banks are well capitalized, capable of absorbing shocks and would comply with minimum capital requirements even under adverse stress scenarios.
Gross domestic product is expected to grow at 7.0% in the current fiscal year ending March 31, according to India government estimates released Jan. 6. This is slightly lower than the 8.7% growth in the prior fiscal year, though still among the fastest out of the major global economies.