Paresh Sukthankar, ED, HDFC Bank tells FE that while rates on deposit could go up slightly, the bank should be able to hold on to its net interest margins (NIM) and grow its loan book faster than the rest of the sector.
Would rising deposit costs put pressure net interest margins (NIMs)
Deposit cost have moved up over the past few weeks but there are unlikely to be any major increases from here on. However, lending rates, particularly interest rates on retail loans, have not gone up commensurately and to that extend there is an upward bias to interest rates. There will be an increase in lending rates, both for retail and corporate loans and most retail products, including auto loans, will see an increase in the next few days. For twenty quarters now we have maintained our NIMs in the range of 4 to 4.3% and we would continue to maintain it in that range.
Is the Casa of 50% sustainable
Historically, the bank has maintained Casa in the range of 45 to 50%. It tends to be higher when there are IPOs. The saving accounts for the bank grew at 30% year on year in the December quarter. As interest rates go up, it is possible customers move their savings from Casa to fixed deposits but broadly we would maintain our CASA in the mid to high forties range.
Which sectors are seeing demand for credit
In the quarter gone by we have seen strong pick up in retail credit, up 34% year-on-year, which has outpaced the corporate loan book, up 29% year-on-year. Within the retail portfolio, the secured loan book has grown faster than the unsecured book. We also bought home loans worth Rs 1,500 crore from our parent HDFC. The rising interest rates could have an impact on loan growth but we believe HDFC Bank will continue to grow faster than the banking industry both on the credit and deposits front.