Operating buffers of top five banks to fall 15%, says India Ratings

The operating buffers — pre-provisioning operating profit (PPOP) — of the top five private sector in India could decline by up to 15 per cent on a year-on-year basis in FY21. This may affect the ability of to withstand credit costs without capital erosion, according to India Ratings (Ind-Ra).

Of the top five private banks, Ind-Ra rates HDFC Bank, Axis Bank, and

The fall could be due to a variety of factors like lower portfolio yields caused by an increase in slippages, lower loan growth due to slow originations and limited enhancements. Ind-Ra said higher liquidity deployed in low-earning government securities or under reverse repo is another factor that may impact capacity.

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