With Little Exposure to Silicon Valley Bank, Indian Banks Succeed Despite the Global Banking Crisis, Experts Say
Analyst: During the SVB Crisis, Indian Banks Stand Out.
Since they have "barely any exposure directly or
indirectly to SVB," Indian lenders stand out above all the "doom and gloom"
in international banks, according to comments made by Macquarie analyst Suresh
Ganapathy in an email on Monday.
Analyst: Indian Banks Shine Out During the SVB Crisis
According to Macquarie analyst Suresh Ganapathy, Indian
banks stand out in the face of the dire situation in the global banking sector
since they have less exposure to Silicon Valley Bank (SVB). Ganapathy claimed
that Indian lenders had "barely any exposure directly or indirectly to
SVB" in a recent email message. Due to their dependence on domestic
deposits, Indian banks have been protected from a potential worldwide contagion
brought on by SVB's problems.
When Jefferies Financial Group Inc. concurred with
Macquarie's forecast on Monday, Indian financial institutions outperformed
their regional counterparts. The MSCI AC Asia Pacific Financials Index fell as
much as 1.3% to add to Friday's 2.2% decline, while the country's banking
sector measure increased as much as 0.6% before reversing gains.
Ganapathy has a positive view of Indian lenders and
predicts a "goldilocks situation" because of the country's
outstanding asset quality over the next two years. The cycle of profit upgrades
for the banking industry is still in progress despite worries about a slowdown
in loan growth and margin compression. During the years up to March 2025,
Ganapathy has increased the sector's expected profit growth predictions by 3%
to 9%.
A subsidiary of SVB Financial Group was sold in 2015, and
a rebranded version of that business has "excellent credit rating and
consistent liquidity," according to Jefferies, which also said that SVB
Financial Group offers "minimal potential risk" to India. The
nation's banks are "well-positioned," according to Prakhar Sharma,
another expert, as more than 60% of deposits are made by individual households.
Due to its domestic deposit-funding structure and
investments in Indian government securities, Indian banks are in a particularly
advantageous position. The industry's heavy dependence on domestic deposits has
protected it from vulnerability to world unrest. It is anticipated that Indian
banks would continue their high asset quality, which will support profit
growth over the coming years.
It is important to note that the bank's lending policies,
notably to high-risk entrepreneurs in the technology industry, are to blame for
SVB's problems. Indian banks, on the other hand, have fared better throughout
the global banking crisis because of their more cautious lending methods.
Due to their cautious lending policies and emphasis on domestic
deposits, Indian banks have managed to stand out in the present global banking
environment with little exposure to SVB. Experts are upbeat about the future of
Indian banks because they anticipate that they will continue to maintain high
asset quality, which will support profit growth for the foreseeable future.
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