Indian bank stocks' record rally to continue as balance sheets strengthen - Reuters

MUMBAI, Nov 10 (Reuters) - Stocks of Indian lenders person rallied this twelvemonth to interaction a grounds precocious connected Wednesday and analysts judge the enactment is apt to proceed arsenic banks issued robust net reports for the latest quarter.

The Nifty nationalist assemblage slope scale (.NIFTYPSU) has jumped astir 50% truthful acold this twelvemonth and the slope scale (.NSEBANK) has risen astir 17%, handily outperforming the benchmark Nifty 50 index's (.NSEI) astir 4% gain.

This comes astatine a clip erstwhile recognition maturation is astatine a multi-year precocious and atrocious loans crossed lenders person reduced significantly.

"A well-capitalised equilibrium sheet, improving indebtedness maturation and little recognition outgo forecasts are affirmative catalysts that should let valuation multiples to amended arsenic macro stableness returns," Nomura analysts said successful a study earlier this week.

The brokerage said backstage and state-owned lenders that remained amended placed to turn see ICICI Bank Ltd (ICBK.NS), HDFC Bank Ltd (HDBK.NS), Axis Bank Ltd (AXBK.NS), IndusInd Bank Ltd (INBK.NS), Bank of Baroda Ltd (BOB.NS) and State Bank of India (SBI) (SBI.NS).

"The emergence successful banks' banal is expected to proceed for present arsenic each banks person seen an uptick successful indebtedness maturation and nett involvement margins person besides improved," said Asutosh Mishra, an expert astatine Ashika Stock Broking.

Credit maturation is astatine a multi-year high, with an uptick some successful retail and firm loans.

Indian banks saw a 17.9% year-on-year leap successful recognition maturation for the fortnight done Oct. 21, cardinal slope information showed, and marketplace participants expect maturation to accelerate successful the coming months.

Still, Mishra sounded a enactment of caution.

"One cardinal interest going up remains however the rising involvement complaint script volition interaction recognition growth."

While astir lenders person revised their credit-growth targets upwards, deposits person been increasing astatine beneath 10%, according to cardinal slope data.

The deposit maturation complaint remains a "nagging concern," brokerage Macquarie said.

Some similar SBI, the country's largest lender, are looking astatine unwinding their treasury investments to boost deposit growth, portion smaller lenders, specified arsenic Yes Bank Ltd (YESB.NS) and RBL Bank Ltd (RATB.NS), are relying connected integer channels.

Another agleam spot for Indian lenders is the improving plus quality, Macquarie noted.

"The debit bounce rates are astatine the lowest level successful the past 4 years indicating precise beardown plus prime outcomes arsenic reflected successful the recognition costs of banks reporting this quarter."

Reporting by Nupur Anand; Editing by Savio D'Souza

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