FC Research forecasts steady phase for banking sector | Daily News

FC Research forecasts steady phase for banking sector

First Capital Research (FC Research) expects the banking sector to have a steady phase during 2018E-20E with stable credit growth, improving GDP growth supporting lower Non Performing loans and lower interest rate volatility leading to stable NIMs, it said in a statement issued yesterday.

First Capital Research expects the banking sector universe to provide 25% average return over a one-year period exceeding the expected market return.

Credit growth to stabilize at 16%-18%: FC Research expects private sector credit growth to slow down to remain stable at 16% during 2018E gradually increasing to 18% through 2019E-2020E on improving GDP growth backed by progressing external sector performance levels and lower impairment due to better credit quality resultant to more business-related credit compared to consumer credit.

Interest rate stability to be mirrored in spreads: First Capital Research expects the banking sector interest spreads to stabilize in 2017E and thereon backed by the implementation of Inflation Targeting Framework, improved government revenue streams, increased foreign inflows into government securities market, introduction of Liability Management Bill to stabilize the interest rate and rate of inflation while the flexible exchange rate policy further supports it.

BASEL III Capital requirements satisfied:

Core and total capital adequacy ratios were maintained at 12.2% and 15% where the regulatory minimums were 5% and 10% respectively. Larger banks in the sector have already taken necessary steps to raise capital thus meeting the BASEL III capital requirement. This move ensures more stability and paves way for the industry to be more resilient and better poised for future growth. 


 

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