State PSUs lack good capital buffer, profitability: Moody’s

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New Delhi | Published: May 30, 2016 5:31:24 PM

Public sector lenders in India lack good capital buffer and profitability, unlike their peers in most countries of the Asia-Pacific, Moody's Investors Service said today.

 

Moody'sIn the release titled ‘Most Asia-Pacific banks have buffers against commodity risks’, Moody’s said banks in Asia Pacific (ex-Japan) show moderate loan exposure to borrowers in commodity-related industries. (AP Photo)

Public sector lenders in India lack good capital buffer and profitability, unlike their peers in most countries of the Asia-Pacific, Moody’s Investors Service said today.

“Banks in the Asia-Pacific except for banks in Vietnam and public sector banks in India show good capital buffer and profitability, providing a good line of defence against rising problem loans,” it said.

Such buffers include generally low problem loan ratios and a problem loan coverage of above 80 per cent for more than half of Asia Pacific banking systems, it added.

In the release titled ‘Most Asia-Pacific banks have buffers against commodity risks’, Moody’s said banks in Asia Pacific (ex-Japan) show moderate loan exposure to borrowers in commodity-related industries, with such loans making up around 7 per cent of gross loans on an average at end-2015.

“However, quality of such loans will likely continue to deteriorate,” the Moody’s assessment read, predicting that energy and commodity prices will remain low over a prolonged period.

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