Banking revival in 2025: Why strong liability franchises stand to gain
Subscribe to enjoy similar stories. Indian bank stocks are waiting for their moment in the sun. After a muted performance in 2024, these stocks are positioning for a potential rebound as monetary and fiscal policy easing is expected in the second half of the fiscal year (H2FY25).
In fact, investor sentiment turned bullish on Wednesday ahead of the Reserve Bank of India’s (RBI) monetary policy meeting on Friday, with speculation around a possible reduction in the cash reserve ratio (CRR). The Nifty Bank index climbed over 1%, led by a 2.1% jump in HDFC Bank shares to ₹1,865 apiece. However, market experts caution that only banks with robust liability franchises and superior credit extension capabilities are poised to take full advantage of the upcoming credit cycle.
“Earlier, all the banks were looking the same because growth was coming off a low base with a moderating credit growth and capex (capital expenditure) cycle. Moving ahead, one will need to have a strong liability franchise for them to make most of the upcoming credit cycle," Trideep Bhattacharya, president and CIO of equities at Edelweiss Mutual Fund told Mint. Read this | PSU banks are giving the best FD rates in eight years. Here's why Strong liability franchises refer to a bank’s ability to attract and sustain a stable, cost-efficient deposit base, which is essential for funding lending activities.
Read more on livemint.com
