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Notwithstanding the positive signs in the Indian banking sector, fundamentals still remain a long way from returning to “healthy levels”, a DBS report said on Friday.
According to the global financial services major, the recent second quarter earnings of Indian banks showed some positive signs, with a slight improvement in asset quality.
Overall, most banks showed a reduction in gross non-performing loans (NPLs) and lower formation of new NPLs. Some banks also expect further improvement in asset quality in the coming quarters, said the report.
DBS, however, cautioned that the recent improvements seen could slow down, as recoveries from ongoing bankruptcy resolutions get more challenging once the better quality assets are sold.
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