Credit Growth to Lift India Bank Profits Despite Likely FX Losses

Strong credit growth helped keep fourth-quarter numbers healthy at Indian banks, numbers from HDFC Bank Ltd. and ICICI Bank Ltd. showed on Saturday, though the latter reported a treasury loss linked to the central bank’s rupee derivatives curbs.

Data from the Reserve Bank of India showed a pickup in credit growth during the January-March quarter, aided by cuts to the key lending rate and cash reserve ratio, as well as a consumption recovery aided by cuts to the good and services tax. Although this increases banks’ credit-deposit ratios, recent messaging from the central bank indicates they have room to further expand their ratios and fund lending growth, Motilal Oswal said.