Banking Sector

The central bank said this in its annual report for 2022-23 citing the slowing of the global economic growth, protracted geopolitical tensions and a possible upsurge in financial market volatility following new stress events in the global financial system. "It is mportant, therefore, to sustain structural reforms to improve India's medium-term growth potential," the annual report notes.

The failure of the Signature Bank has been largely attributed to the contagion effect of the collapse of SVB, leading to an environment of fear and distrust. At the same time as the SVB debacle, another crypto-based Silvergate Bank collapsed due to a drastic fall in customer confidence.

Indian Bank said it closed FY23 with an after tax profit of Rs 5,281.70 crore (previous fiscal Rs 3,944.82 crore) on a total income of Rs 52,085.27 crore (Rs 45 771.67 crore). The bank Board has approved a capital raising plan of Rs 7,000 crore - Rs 4,000 crore equity from rights issue and other modes and Rs 3,000 crore as AT 1/Tier-2 capital issuing bonds.

PacWest shares are up 9 per cent in pre-market, a small recovery after tumbling 46 per cent on Thursday, while Western Alliance have gained 12.7 per cent after a 38 per cent tumble and First Horizon, which lost 33 per cent, are up 7 per cent, The Guardian reported.

First Horizon is a regional lender in the southeast United States and would have helped Canada's TD expand south of the border. But regional banks have been losing the confidence of investors and customers since the March collapse of Silicon Valley Bank and Signature Bank.

The company's contribution margin rose to Rs 169.5 crore in FY23 as compared to Rs 42 crore in FY22, nearly 304 per cent year-on-year growth. Fifty per cent of the company's revenue came from the distribution of digital credit products, and the rest came from its payments business.

Shares of PacWest Bancorp tumbled about 22 per cent, paring back earlier losses. Western Alliance Bank fell about 16.3 per cent and New York Community Bancorp declined 6.6 per cent. The SPDR S&P Regional Banking ETF, which tracks a range of mid-sized banks, dropped about 7.3 per cent, CNN reported.

According to CARE Ratings report, the deposit rates are rising faster than lending rates and going forward it may impact the banks net interest margin (NIM). Further, the rates on fresh business have risen faster when compared to rates on outstanding business.

The Federal Deposit Insurance Corporation, a federal regulator, has reportedly asked six banks to bid for the embattled lender. Shares in First Republic plunged last week after it admitted customers had withdrawn $100 bn in deposits in March, the BBC reported.

US officials are already in talks of providing a possible FDIC receivership to First Republic. A lot is at stake for Fed now, as it considers the next rate action given the stubbornly high inflation, elevated wage growth, credit crunch scenario and uncertainty in global growth, the note said.