India’s Leading BFSI Companies 2020

XV We can observe the credit to non-financial sectors in emergingmarkets falling below the average trend line of last five years. Among developing markets wide variations are evident, with one end of the spectrum experiencing credit contraction as in Brazil on account of deleveraging of subsidized credit, high intermediation margins and weak demand. In some other EMEs such as Russia and India, elevated loan delinquencies operated as a drag on credit growth, whereas in China, policy- induced rebalancing, regulatory tightening and deleveraging efforts are acting as inhibiting factors. With growth slowdown that began in 2018, credit growth, has slowed down across major economies, which, in turn, has adversely affected bank profitability. Despite distinct improvement in asset quality, structural weaknesses remain in the banking systems in various economies across the world, although capital position has been strengthened. Emerging economies trend Return on Assets -1.0 0.0 1.0 2.0 3.0 4.0 2012 2013 2014 2015 2016 2017 2018 % Brazil China India Russia South Africa Indonesia Among EMEs, the profitability of Indian banks remained muted, though recent quarters indicate improvement. The profitability of Chinese banks also came under pressure in 2018 fromasset quality issues, ongoing deleveraging, decelerating loan growth and weak balance sheets of small and medium-sized banks. Non-Performing Loans 0.0 4.0 8.0 12.0 2012 2013 2014 2015 2016 2017 2018 % Brazil China India Russia South Africa Indonesia The asset quality of EME banks showed a mixed picture, improving in Brazil and India but deteriorating in Russia, South Africa and Turkey Dun & Bradstreet