EUR 120.00 For Business Accounts Only

MOSL: FINANCIALS-Credit growth remains healthy-Retail/SME loan growth strong-industrial growth showing signs of recovery

Financials: Credit growth remains healthy; Retail/SME loan growth strong; industrial growth showing signs of recovery

 

• For the fortnight ended 15th Mar'19, systemic loan growth remained strong at 14.5% YoY (v/s 14.4% for last fortnight) with the outstanding credit base reaching INR95.5t. Credit growth was driven by both retail and the services' segments. Also, growth in the industrial segment improved to 5.6% YoY (v/s 1.0% YoY in Apr'18), clearly showing signs of a recovery. Banks' lending to NBFCs has also slightly improved (3.2% MoM).
• We expect loan growth to remain steady, led by (a) continued strength in the retail segment, (b) portfolio buyouts from NBFCs due to continued funding pressure, (c) the government's recent capital infusion in PSU banks, and (d) the RBI's decision to bring six banks out of PCA.
• Moreover, with better capacity utilization in the system, the capex cycle is also improving, which should further support credit growth. We continue to believe that private banks' loan growth will remain healthy at ~20% YoY, driven by retail and the SME segments. Moreover, private banks should continue gaining market share not only from PSBs, but also from NBFCs.
• Deposit growth for the fortnight stood at 10.0% (v/s 9.8% the last fortnight), mainly due to a benign base. The outstanding deposit base reached INR122.3t. System CD ratio stood at 78.1% (30bp higher than last fortnight), while the investment-to-deposit ratio was at 27.8%.