With inflation expected to ease going forward, banks may lower deposit rates, broking firm Angel has said a report.
"With inflation levels expected to ease going ahead, financial savings are expected to strengthen leading to higher deposit accretion, allowing banks to reduce their deposit rates," the brokerage firm said in its report.
Inflation levels have come off considerably over the past six months and are expected to cool off further as demand remains weak and policy effects further kick in, the report added.
"With inflation and consequently interest rates having a downward trajectory going ahead, we expect lower defaults, which coupled with higher recoveries (from higher delinquencies during the last two years) should lead to asset-quality improvement for the banking sector," Angel said in its report that covers 27 lenders.
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