MUMBAI, March 21 (Reuters) - Indian lenders are capable
of enduring any potential contagion effects emanating from the
U.S. banking turmoil and UBS's recent takeover of embattled
Swiss lender Credit Suisse given their manageable exposures to
their global counterparts, S&P Global Ratings said on Tuesday.
"Strong funding profiles, a high savings rate, and
government support are among the factors that bolster the
financial institutions we rate," the rating agency said.
S&P also said Indian banks had sufficient buffers to
withstand losses on their sizable government securities
portfolio due to rising interest rates.
The Reserve Bank of India has increased the policy repo rate
by 250 basis points since May last year.
Analysts have said that Indian banks are now in a better
position to withstand stress given their current capital levels
and healthy asset quality.
Stress tests conducted by the central bank and released as
part of the Financial Stability Report (FSR) in December have
also shown that banks would be able to comply with minimum
capital requirements even under adverse scenarios.
S&P said that only a significant escalation of the current
crisis would force it to change its view.
However, the decision to write down Credit Suisse's
additional tier-1 bonds to zero after the lender's takeover by
UBS may contribute to a higher cost of capital for domestic
banks, S&P said.
(Reporting by Siddhi Nayak; Editing by Savio D'Souza)
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.