Meet the newest banking indicator in town: The Divergence Ratio

Ira Dugal of Bloomberg Quint introduces us to this new indicator :-):

The gross nonperforming asset ratio. The slippage ratio. The credit cost. The provision coverage ratio. All part of a long list of indicators that banking analysts are tracking to understand how sound Indian banks are. Now welcome to that list a new indicator. The divergence ratio.

In case you are wondering what each of these means – the gross NPA or non performing assets ratio is the ratio of bad loans to total loans; the slippage ratio is the rate at which good loans are turning bad; the credit cost is the amount a bank expects to lose due to credit risks; and the provision coverage ratio tells you how much money a bank has set aside to cover for bad loans.

Being a new entrant to the Indian banking lexicon, ‘The Divergence Ratio’ (a name coined by BloombergQuint) deserves more attention.

So what are we talking about?

We of course know what is the talk about

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