Rising competitive intensity for both assets and liabilities amid growing regulatory scrutiny indicate a new chapter in Indian banking, says Rahul Jain, head of India equity research, Goldman Sachs
India’s second-biggest bank may not be the cynosure of investors as the merger with HDFC weighs heavy, shaving off 16% of its market cap. But who can afford to ignore the 800-Pound gorilla?
Since the global financial crisis, Indian banks have performed better than their international counterparts in a number of criteria and have shown greater resilience.
The merger and asset quality overhang may have kept its growth tepid, but it posted a higher-than-expected net profit of ₹506 crore in the third quarter.
While Indian banks' improved financial metrics do not fully reflect the impact of the Covid-19 pandemic, the under–capitalised PSBs are likely to remain risk averse and lose market share.