ICRA Downgrades Banking Sector’s Outlook to Stable

(20 second reading) Rating agency Icra revised downwards its outlook for the banking sector to ‘stable’ from ‘positive’ on expectations of a moderation in credit growth and profitability.

The agency said the credit growth will moderate to 11.6-12.5 per cent in FY25 from 16.3 per cent (excluding the impact of the HDFC twins merger) in FY24, while the lower net interest income margins on higher deposit rate payouts will lead to a dip in profits.On the asset quality front, it expects a further moderation in the gross non-performing assets ratio for the banking system at 2.2 per cent by March 2025 from 3 per cent likely in March 2024,