Second wave of COVID infections impairs Indian banks’ performance through 2022 | Asian Business Review
, India

Second wave of COVID infections impairs Indian banks’ performance through 2022

Recovery will be more subdued as households prioritize rebuilding their savings.

Indian banks face systematic risks as the country sorts through the aftermath of the second wave of infections in the country, reports S&P Global Ratings. The infections are expected to impair Indian financial institutions’ performance through the first half of fiscal year 2022.

Lenders have struggled with weak loans well before the pandemic struck and conditions have clearly deteriorated, S&P said.

A COVID resurgence involving new and potentially aggressive variants and an underwhelming vaccine rollout program remain as key downside risks.

"The second wave has front-ended weakness in asset quality," said S&P's Credit Analyst Deepali Seth Chhabria. "Financial institutions face a strained first half amid weak collections and poor disbursements."

The banking sector's weak loans are expected to remain elevated at 11% to 12% of gross loans over the next 12 to 18 months, Chhabria said. Credit losses will also remain high at 2.2% before recovering to 1.8% in the fiscal year ending 31 March 2023.

Limited vaccine supplies and people's reluctance to take doses have also held back the country's inoculation program, Chhabria added. S&P estimates that fully vaccinating roughly 70% of the country will likely take at least until the first half of 2022. This leaves the economic recovery highly vulnerable to COVID setbacks, particularly if fresh outbreaks trigger new lockdowns.

Currently, the Indian economy has only just begun recovery mode in June, following a sharp contraction in economic activity in April and May after the government imposed localized lockdowns across the country to contain the second wave of COVID infections, which has been responsible for about 235,000 deaths.

As a result of the lockdowns, consumption indicators, such as vehicle sales, fell sharply in May 2021 and consumer confidence remains downbeat.

“The latest outbreak has less severely affected the country's manufacturing and exports than was seen during the first wave of infections in 2020, but services continue to be disrupted,” Chhabria said.

S&P expects that the current recovery should be less steep than the bounce that unfolded in late 2020 and early 2021.

“Households are running down savings. A desire to rebuild their cash holding may delay spending even as the economy reopens,” Chhabria said. “Whilst we expect real [gross domestic product] growth of 9.5% in fiscal 2022, this is off a low base.”

Follow the link s for more news on

Asia-Pasifik mungkin tidak mencapai target energi terbarukan

Negara-negara di kawasan itu harus menarik investasi untuk memajukan tujuan energi bersih mereka.

Clone of BCA menjalankan komitmen terhadap keuangan berkelanjutan

Bank asal Indonesia ini mempertimbangkan aspek lingkungan dan tata kelola dalam keputusan pemberian pinjaman.

K3Mart memadukan budaya Korea dan produk UMKM lokal dalam satu gerai

Convenience store itu menyediakan perbandingan produk impor dan produk lokal sebesar 50:50 di 30 outlet mereka.

Analisa data, kunci kesuksesan AIA Indonesia dalam mengatasi penipuan

Prosedur operasional standar dan penyidik yang terlatih menjaga AIA Indonesia tetap terkendali.

KCG menguasai brand positioning untuk segmen premium di Indonesia

Mereka mengadopsi solusi berbasis teknologi terbaru untuk sukses mengelola 92 toko ritel di 20 kota di Indonesia.

Sistem JAMALI terancam oleh ancaman keandalan dan efisiensi

Sistem Jawa-Madura-Bali (JAMALI) menyuplai 70% listrik Indonesia untuk 160 juta orang.

Bacha Coffee menguasai retail kaya sensorik di Jakarta

Memadukan warisan dan kemewahan, Bacha Coffee Plaza Senayan menghadirkan pengalaman unik bagi pecinta kopi Indonesia.

Lippo Malls menyesuaikan diri dengan perubahan preferensi konsumen

Lebih dari 60% pengunjung mal mereka berasal dari generasi muda.

Inovasi medis global dan solusi berbasis AI menjadi sorotan

Medical Taiwan 2024 menghadirkan 280 peserta dari 10 negara dan mendorong integrasi teknologi dalam layanan kesehatan.

Permintaan untuk pembayaran digital semakin meningkat di Indonesia

Dua pemimpin layanan keuangan digital menekankan pentingnya kolaborasi daripada persaingan.