Event update: Financials - Sectoral deployment of Credit April'18

According to the sectoral deployment of credit, sector loans have grown 10.4% yoy , 4.3% qoq and declined 1.4% mom as at end April. Non-food credit grew 10.7% yoy compared to 8.4% yoy in Mar-18. While the yoy growth has picked up on a low base, m-o-m, loans have declined. The monthly drop is because of a strong growth in March led by loans to NBFCs that grew 27% mom, large corporate loans that grew 3% and priority MSME at 9%. As April has traditionally been a lean month, demand from all these segments fell. Except for retail loans and trade, there is no definitive trend of growth for other segments since demonetisation. This is a monthly reporting and does not change our view on the sector. Prefer retail banks and NBFCs over corporate banks.  

Key highlights

• Retail loan growth revived to 19.9% yoy in April’18 compared to 15.7% in March’18 and 17.2% in Feb’18. Within retail loans, housing (at 14.9 yoy /1.1 mom), personal loans (19.1% yoy and 0.7% mom) and micro credit (40% yoy and -3.3% mom) were the key growth drivers.
• Retail accounts for 41% of incremental growth over the last one year against an outstanding share of 51% in total credit. NBFCs contributed 34% to net incremental credit growth over the last one year against an outstanding share of 6% in credit and trade accounted for 18% of incremental credit growth against an outstanding share of 6.1%. Contribution of corporate loans remains negative.
• Total home loans grew 14.9% yoy and 1.1% mom with a higher contribution from non-priority housing. Growth in non-priority housing loans improved to 24.9% yoy / 3.3% mom in April’18 from 21.8% yoy in March’18 while growth in priority home loans was lower at 1.2% yoy / -2.4% mom.
• Growth in credit outstanding for cards remains strong at 35.2% yoy and 6.6% mom.
• Strong momentum in micro credit continues as it posted a growth of 40% yoy /-3.3% mom in April’18 against 39.5% in March’18 and 30% in Feb’18.

·      Nothing big to report in the industry wise corporate credit breakdown with all key industries including metals, power, roads, engineering showing a mom decline.