India’s Private Banks Expected to Trounce State Peers in India’s Recovery

India's private banks are expected to outperform the state-backed peers when India's economy recovers, with a widening gap which would expose in the near future, according to Bloomberg.

Investors will keep an eye on the indications that private banks have stronger flexibility to offer themselves more wiggle room to enhance lending once the pandemic subsidies. One indicator is that major private banks' market share in terms of loans showed a sharp increase to 36% in 2020 from about 21% five years ago.

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Latest data demonstrates that the top three private banks' lending were nearly three times larger than the average industry rate in March, while maintaining better asset quality than their state peers. Besides, state bank bad-loan ratios keep increasing compared to the private peers apart from declines in recent years. Furthermore, private banks' price-to-book ratios were more than twice that of state peers.