India’s Leading BFSI and FinTech Companies 2023

8 | India’s Leading BFSI and FinTech Companies 2023 [ INDIAN BANKING SECTOR OVERVIEW ] The key highlight was banking credit to industry, which accounts for ~30%of total outstanding credit grew by 7.8%, highest rate since last 8 years. Within industry sector, credit to MSME grew by 33%. Incentives provided by Emergency Credit Line Guarantee Scheme (ECLGS) coupled with lower GNPA ratios, helped boosting credit to MSMEs. During FY22, outstanding credit to priority sector grew at 12.3%. All bank groups managed to meet their overall priority sector lending targets, while foreign banks and small finance banks also achieved all the sectoral targets. Although the share of priority sector loans increased marginally from 35.3% in FY21 to 35.8% in FY22, share of total gross NPAs increased from 40.4% in FY21 to 43.1% in FY22 led by higher defaults in the agricultural sector. PROFITABILITY RATIOS: NIMs AT HIGHEST LEVELS FOR LAST 5 YEARS A pick-up in credit demand was led by retail loans due to uptick in economic activity, lower credit costs and increased consumer spending helped Indian banks to improve profitability for FY22. With greater transparency in asset recognition and stronger capital and provision buf fers, banks faced the pandemic on a stronger footing. Net Interest Margins of Indian Scheduled Commercial Banks (%) Source: RBI The total income of all scheduled commercial banks increased by 2.6% in FY22 to reach INR 15.1 trillion. The expenditure declined by 1.7% primarily driven by lower provisions and interest expenses. The net profit of all scheduled commercial bank increased by 49.2% to reach INR 1.8 trillion in FY22. The net interest margins improved by 10% during FY22. The cost of fund for all scheduled commercial banks stood at 3.7% while return on funds was 7%, with spread of 3.3% Banking credit to industry, grew by 7.8%, highest rate since last 8 years RoA and RoE improved to levels last observed during 2014/15 Dun & Bradstreet