With unprecedented frauds and surging bad debt, Indian banks have fared badly in credit profile, asset quality, capitalisation and profitability, according to a report published on Monday by Moody's Investors Service.

With regards to operating environment, Indian banks managed to perform well, said the report titled "Banks - Brazil, Russia, India, China, South Africa (BRICS): China's banking system has strongest credit profile in BRICS bloc; Russia's has weakest'.

The report compares banks in Brazil, Russia, India, China and South Africa according to their credit profiles, operating environment, asset quality, capitalisation and profitability.

Credit profile

Among rated BRICS banks, Moody said Chinese banks are strongest largely thanks to the dominance of large state-owned banks. By contrast, Russian banks have the lowest adjusted BCA of ba3, resulting from relative weakness in asset quality, liquidity and profitability.

Operating environment

Moody said economic recovery in Russia and Brazil will continue at a steady pace through 2019. India's real GDP growth will accelerate after moderation in 2017, and so will that of South Africa from 2019. China's real GDP expansion will slow, but modestly, the report said.

Asset quality

Chinese banks are strongest as they had the lowest problem loan ratio of 1.5 percent at the end of 2017. By contrast, Russian banks had the highest ratio of 11.8 percent, closely followed by Indian banks.

Capitalisation

South African banks are strongest as tangible common equity amounted to 12.4 percent of risk weighted assets (RWAs) at the end of 2017, the highest among BRICS systems. At the other end of the spectrum, Indian banks had a tangible common equity ratio of 8.7 percent.

Profitability

Indian banks are also distinctively weak. The system as a whole is unprofitable due to high credit costs at dominant state-owned banks. By contrast, Brazilian and South African banks have the highest return on assets (ROAs).

First Published:Oct 22, 2018 5:48 PM IST