Shillong, August 24: Indian banks are anticipated to reward shareholders with the most substantial dividends in at least seven years, according to S&P Global Market Intelligence.
The aggregated payout across all sectors is predicted to reach 13% for the fiscal year ending March 31, 2024, marking an increase from 12% in the previous fiscal year (ended March 31, 2023) and 9% in the year before (ended March 31, 2022).
As per IANS, this resurgence is a significant contrast to the mere 1% dividend payout in 2020, a year heavily affected by the COVID-19 pandemic, during which the Reserve Bank of India had advised banks to conserve cash and suspend dividend distributions. Notably, HDFC Bank was the major lender that made a dividend payout in 2020, commemorating 25 years of its operations.
Market Intelligence data indicates that Indian banks’ combined dividend share was 7.6% in the fiscal year ending March 2017, followed by 5% in the two subsequent pre-pandemic years.
Tusharika Aggarwal, a dividend forecasting research analyst at S&P Global Market Intelligence, commented, “Banks remain well-positioned to capitalize on opportunities in the Indian economy and banking industry.” Aggarwal highlighted India’s robust economic activity, projecting sustained high credit growth and consequently strong earnings for Indian banks.
Recent reports reveal that several Indian banks have reported record net profits due to increased interest rates and robust credit growth as the country’s economy rebounds from the pandemic. Both state-owned and private banks have made progress in reducing bad debts and enhancing financial metrics such as capital-to-risk-weighted assets and common equity Tier 1 ratios.
The Reserve Bank of India (RBI) disclosed that the system-wide gross nonperforming asset ratio decreased to 3.9% in March, representing the lowest figure in a decade.
