S&P expects improvement in bank performance in FY15

Ratings agency Standard & PoorÂ’s (S&P) expects the performance of Indian banks to improve only in 2014-15.

The agency feels that till then the banking sector would continue to face hurdles, in terms of asset quality and earnings.

In 2013-14, the agency expects improvement in the economic growth and corporate performance aided by various reform measures by the government.

In 2012-13, S&P has estimated growth in gross domestic product (GDP) at 5.5 per cent, against the Central Statistics OfficeÂ’s estimate of five per cent.

The ratings agency estimates GDP growth in 2013-14 and 2014-15 at 6.4 per cent and 7.2 per cent, respectively.

S&P’s analyst Geeta Chugh said, “Increased government welfare spending in the election year, improvement in private consumption, lower interest rates and a better agricultural output would help the country achieve 6.4 per cent growth next year.”

The governmentÂ’s reforms push would be the key factor in any improvement in the performance of companies, S&P said.

Among several reforms, the formation of the Cabinet Committee on Investment to push large-investment projects could improve the operating environment for companies, the agency feels. S&P also pointed out the passage of land acquisition Bill in the Cabinet as an instance of the governmentÂ’s thrust on improving corporate performance.