Indian banks grow total assets buoyed by strong economy

State Bank of India, HDFC Bank Ltd. and ICICI Bank Ltd. were the three largest Indian lenders by total assets as of March 31 as their balance sheets were bolstered by the South Asian nation's strong economic growth.

State Bank of India topped a ranking of the top 20 Indian banks by total assets. The state-run lender's assets increased 11.5% to $808.20 billion in the financial year that ended March 31, according to S&P Global Market Intelligence data. It came 20th in a ranking of the biggest banks in the Asia-Pacific region.

HDFC Bank increased its total assets by 57% to $483.70 billion, while ICICI Bank grew its assets by 19% to $283.74 billion, the data shows.

The Indian economy is projected to grow by an average 6.7% per fiscal year from 2024 through 2026, a June 11 report from the World Bank said. India is expected to remain "the fastest-growing of the world's largest economies, although its pace of expansion is expected to moderate," and investment growth is expected to remain robust over the forecast period, with strong public investment accompanied by private investment.

The Reserve Bank of India revised its economic growth expectation to 7.2% in the fiscal year that started April 1, from its prior forecast of 7.0% on June 7. Credit growth for scheduled commercial banks in the country rose by 15.3% year over year in April, compared to growth of 16.2% in the prior year, according to data from the central bank.

Moderation in growth and outlook

All 20 banks on the list grew their total assets year over year and most maintained their position from the prior year, reflecting strong results and robust growth in the Indian economy.

The Bank of Maharashtra dropped to the last position on the ranking as IDFC First Bank Ltd. rose to the 19th position. As in previous years, no foreign lenders made the list because of a strong domestic banking industry.

IDFC First Bank plans to consolidate its holding structure via a merger with IDFC Ltd., after the amalgamation of IDFC Financial Holding Co. Ltd. into and with IDFC.

Indian banks' asset quality will further improve, propelled by India's economic growth momentum, though a rise in loan-to-deposit ratio could impact future credit growth, S&P Global Ratings said in February.

Ratings expects credit growth for Indian banks to moderate to 14% in the current fiscal year. Lenders need to strike a balance between maintaining strong loan growth and paying more for deposits to fund such growth, as moderating loan growth leads to competition for deposits, Ratings said.