Indian banks' dividend to rise to at least 7-year high in FY24 - S&P report

(Corrects to S&P report from S&P Global in headline)

MUMBAI (Reuters) - Indian banks' aggregate dividend payout to shareholders is set to rise to its highest level in at least seven years in 2023-2024, helped by strong business metrics and healthy credit growth, a report from S&P Global Market Intelligence showed.

India's brisk economic activity will likely "sustain high credit growth," resulting in "excellent" earnings forecasts for banks," Tusharika Aggarwal, a dividend forecasting research analyst at S&P Global Market Intelligence said in the report released on Thursday.

Axis Bank, Bandhan Bank and AU Small Finance Bank will lead dividend payout increases in the next few years, Aggarwal said.

Lenders reported healthy growth in net profits last fiscal year and in the first quarter of this financial year on accelerating credit growth and shrinking bad loans.

Banks will likely account for 13% of the aggregate dividend payout across all sectors this fiscal year ending March 31, up from 12% and 9% in the previous two financial years, per the report.

This share was barely 1% in 2020-2021, when the Reserve Bank of India asked lenders to conserve cash and suspend dividend payments due to COVID-19.

(Reporting by Siddhi Nayak; Editing by Dhanya Ann Thoppil)