Indian Banks Poised for Cyclical Turnaround
Indian banks are on the cusp of a cyclical turnaround, according to Goldman Sachs. The financial institution predicts that core Pre-Provision Operating Profit (PPoP) growth will accelerate to approximately 17% year-on-year over FY26-FY29E.
This marks a significant reversal from the modest earnings observed in recent years. Steady loan growth of around 14%, a 10 basis points recovery in net interest margins (NIM), and benign asset quality are expected to drive this expansion, despite near-term macroeconomic and geopolitical uncertainties.
The Goldman Sachs report highlights that structural headwinds across the sector appear fully factored into current market multiples. Private bank valuations have dropped near 15-year lows, falling below levels seen during the COVID-19 pandemic.