Private sector lenders Karnataka Bank and City Union Bank on Wednesday posted a single-digit loan growth for Q4FY23 while YES Bank reported 11.3% YoY growth, much below the industry average.
As per provisional data filed by the banks with the exchanges, Karnataka Bank’s total advances rose 6% year-on-year (YoY) to Rs 61,326.98 crore as on March 31, the slowest pace of growth amongst other banks who posted Q4FY23 provisional data on Wednesday.
Karnataka Bank said though its retail lending portfolio has grown at nearly 12% YoY to Rs 30,863.4 crore as on March-end, it took a conscious decision to not grow large corporate book on account of low yields and high competition from peers, which could have hurt the bank’s net interest margin (NIM).
The large corporate book of Karnataka Bank stood at Rs 12,367.9 crore, lower 15.2% on a sequential basis but up 5.1% on a yearly basis. The bank’s total deposits rose 8.7% YoY to Rs 87,362.56 crore. Current account and savings account ratio stood at 32.97% as on March 31, flat compared with last year.
City Union Bank reported its total advances at Rs 43,948 crore as on March end, up 7% YoY. The bank’s total deposits, however, grew at a higher rate of 10% during Q4 to stand at Rs 52,399 crore as on March 31, of which CASA deposits were at Rs 15,658 crore.
“City Union Bank’s lower credit growth was anticipated as even in last quarter (Q3FY23) their loan growth numbers were below under industry average. The bank’s management had said that there was a lag in deposit growth in Q3 so the bank will not pursue aggressive credit growth. Further in Q4, deposit growth of banks has been higher than Q3 and it is likely to continue, as banks are offering fixed rate deposit at higher rate of 7% and more. We are expecting further rise in deposit rates as liquidity is tight presently,” said Cyril Charly, research analyst at Geojit Financial Services.
Meanwhile, YES Bank reported 11.3% YoY credit growth for Q4FY23, with its total advances touching Rs 2.01 trillion as on March 31. Gross retail disbursements were at Rs 12,847 crore during the quarter ended March as against Rs 10,201 crore a year ago. The bank’s Q4 loan growth was below the industry average of 15.9%.
YES Bank’s deposits rose in-line with credit growth, at 10.6% YoY to Rs 2.18 trillion as on March end. CASA ratio, however, moderate slightly on year to 31% in Q4FY23 as against 31.8% in Q4FY22.
In a recent conversation with FE, South Indian Bank chief Murali Ramakrishna had said CASA ratio hasn’t grown well from October onwards for many of the banks and that banks are also witnessing customers moving their cash from low-cost current accounts and savings accounts to attractive deposit schemes.
“With every bank increasing their deposit rate, people are finding more income coming from deposit product, therefore, we are seeing traction happening in deposit growth but CASA in that process is suffering a little bit, but we are sure of retaining about 33% level for fiscal (FY23)… for coming year we are targeting at least 35% by March 2024,” Ramakrishna said.
Further, Bank of Maharashtra’s exchange notice shows its Q4FY23 advances rose 30% YoY to Rs 1.75 trillion as on March-end while total deposits grew 15.7% YoY to Rs 2.34 trillion as on March 31. The bank’s credit deposit ratio rose to 74.87% during Q4FY23 from 66.85% in Q4FY22.