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Bank stocks still not fully pricing in Covid-19 lockdown impact: Analysts

An analysis by HDFC Securities shows that adjusted book value (ABV) for banks could fall up to 22 per cent in the worst case scenario, while return on average assets (ROAA) could dip 25-70 bps in FY21

On Monday, Nifty Bank index declined 2.6 per cent on the National Stock Exchange (NSE) after S&P Global Ratings on Friday warned that NPAs could rise up to 13-14 per cent in FY21 due to Covid-19 pandemic
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On Monday, Nifty Bank index declined 2.6 per cent on the National Stock Exchange (NSE) after S&P Global Ratings on Friday warned that NPAs could rise up to 13-14 per cent in FY21 due to Covid-19 pandemic

Nikita Vashisht New Delhi
Despite improving loan recoveries in June 2020, analysts believe the situation for the Indian banking sector remains fluid as the economic impact of Covid-19 is far from over. While the moratorium given by the Reserve Bank of India (RBI) will optically limit gross non-performing assets (GNPAs) till the first half of financial year 2020-21 (H1FY21), asset quality deterioration is inevitable, they say.

Vishal Goyal, research analyst at global financial services firm UBS believes that corporates rated BBB or below (pre-Covid-19) or where earnings before interest, tax, depreciation, and amortisation (EBITDA) to interest cover is less or equal to 2x are at

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First Published: Jun 29 2020 | 1:00 PM IST

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