RBS Cuts Indian Banks' Rating to 'Neutral' From 'Overweight'

Mumbai: RBS has downgraded Indian banks to 'Neutral' from 'Overweight' as it expects them to remain under pressure in the next few quarters due to falling net interest margins, decelerating growth rate and higher credit costs at public sector banks. "We think the slowdown of GDP growth and high interest rates will start taking a toll on Indian banks' earnings in FY3/12, which will be reflected in a slower loan growth (around 15-16%), higher non-performing loans and, thus, lower earnings growth," RBS said in a report.