'Financial sector biggest wealth creator, and destroyer too'

Contrasts in dud asset accumulation between entities have made the financial sector earn the distinction of both being the largest wealth creator, as well as destroyer, in the last five years.

Investments in the more resilient private sector lenders and non-bank financiers have pushed it to be the largest wealth creator between 2013 and 2018, a report by the brokerage Motilal Oswal said.

However, bets on the state-run lenders, which have seen erosion in profits and share prices due to the non-performing assets troubles, earn the sector the tag of being the largest wealth destroyer as well.

"The financials sector has the unusual distinction of being the biggest wealth creator (thanks to private banks and NBFCs) and the biggest wealth destroyer (thanks to state-owned banks)," it said.

It can be noted that the dud assets in the system have crossed Rs 10.5 lakh crore and the accelerated recognition in the last four years has also led to curbs on normal activities on 11 of the 21 state-run lenders.

In a trend that extends beyond banking, the report said wealth creation by state-run enterprises has dipped massively over the last 13 years.

The report said the public sector undertakings have become "marginalised" in wealth creation and have seen their share of wealth creation collapse to 9 per cent in 2018, against 51 per cent in 2005.

HDFC Bank has emerged as the biggest wealth creator for the first time in the report's 23-year history.

Tata Group company Titan has emerged as the consistent wealth creator for the last 10 year, while Indiabulls Ventures emerged as the fastest wealth creator.

The report said wealth created is defined as the difference in market capitalisation over a period of last five years, duly adjusted for corporate events such as fresh equity issuance, mergers, demergers and share buybacks.

The ranking of top 100 includes purely companies which have outperformed the benchmark, it said.