Synopsis: HDFC Bank, ICICI Bank, and the other three largest private banks have reported their Q2 results. Which bank delivered the best in terms of asset quality?

Asset‍‌‍‍‌‍‌‍‍‌ quality ranks among the key measures that reveal the financial condition of a bank. It essentially demonstrates the security of the bank’s loans and the repayment capacity of the borrowers. A decline in asset quality means banks will have to face problems with increasing NPAs, elevated provisioning expenses, and a decrease in profitability.

One of the best examples was the Yes Bank crisis, when the increase in bad loans led to loss of investor confidence and regulatory intervention. Hence, healthy asset quality not only acts as a cushion for profits but also guarantees the bank’s viability and trust over ‍‌‍‍‌‍

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