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UBS Securities expects loan growth of 15% for FY20

Updated : July 11, 2019 04:58 PM IST

UBS Securities on Thursday said it expects loan growth of 15 percent for FY20 and sees an improvement in market share of banks compared to non-banking financial companies (NBFCs) and mutual funds.

In an interview to CNBC-TV18's Abhishek Kothari, Vishal Goyal, an analyst said, "In last six months, we have seen significant downgrades by rating agencies. Also, the NBFC funding environment is also foreseeing some of the borderline companies to default. So, you are seeing a slight increase in stress."

"If you look at the data on consumption, that also does not augur well for asset quality or let us say corporate performance in general. So, all this should lead to slightly higher than expected slippages and also slightly higher watchlist numbers from what we were previously expecting," Goyal said.

"A large part of the stress book, which is steel, power and even some construction has already been recognised and that leads us to believe that a big portion of non-performing loan (NPL) risk is behind. Even when we do our NPL scorecard, we also identified 18 percent of problem assets and almost 14 percent has already been recognised. So, to that effect, a large portion has already been recognised but 4 percent is still left to recognised and which may happen over the next 12-24 months. However, that is still a significant portion in my view which is yet to be recognised," he added.
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