Top banks' asset quality pains are easing, show July-September earnings

Results of SBI, ICICI Bank and Axis Bank indicate respite in formation of fresh bad loans; resolution and recoveries will be important for the trend to sustain

A common thread running through the results of India's top banks that announced their July-September quarter (Q2) results in the past week — these lenders had seen bad-loan issues in the past — is clearly that of an improving asset quality.

While Axis Bank’s numbers gave some cue, State Bank of India (SBI) and ICICI Bank cemented the trend. ICICI Bank particularly deserves a mention, given that its net non-performing assets (NPA) or bad loan ratio, at 1.6 per cent, is inching lower towards pre-asset quality review (pre-AQR) days. The interesting part is that slippages or formation of new bad