A clutch of private sector banks have witnessed a strong credit growth for the quarter ended December 31. They have also seen a solid improvement in deposit growth, which has been a cause for concern for most lenders this year. However, the growth in deposits has come from costly term deposits as lenders have seen a decline in low-cost deposits.
HDFC Bank reported the highest growth at almost 20% for the quarter, with the total deposit base being at Rs 17 trillion. For Yes Bank, the deposit growth was higher at 16% compared to its loan growth. The bank’s deposits stood at Rs 2.1 trillion as of December 31. IndusInd Bank saw a deposit growth of 14% to Rs 3.3 trillion. The deposit growth of these banks is significantly higher than the sector level of 9.8% as of December 2.
HDFC Bank and IndusInd Bank reported loan growth of 19.5% and 19%, respectively, for the quarter under review. They have seen higher-than-industry loan growth while Yes Bank has reported a 12% Y-o-Y growth in advances. HDFC Bank announced a 21.5% growth in retail loans, 30% in commercial and rural banking loans and 20% in corporate and other wholesale loans.
In absolute terms, HDFC Bank’s net advances stood at Rs 15.1 trillion in Q3FY23. Advances of IndusInd Bank were at Rs 2.7 trillion while those of Yes Bank stood at close to Rs 2 trillion.
Earlier this week, mid-sized lenders such as Karnataka Bank, CSB Bank, Maharashtra Bank and Federal Bank reported credit growths in the range of 12-25%. The banks’ credit growth has consistently been rising for the past eight months. At industry level, the non-food credit growth is now stable at 17.9% as of the fortnight ended December 2. However, it is expected to moderate to 14-15% later in the year as the effect of pent-up demand from the pandemic period weans and some sectors are affected by global headwinds, economists at Bank of Baroda had said in a report.
The current account, savings account (CASA) ratio declined 31 bps for HDFC Bank to 44% in Q3FY23. The ratio of low-cost accounts also declined for Yes Bank, although marginally by 8 bps, to 30.4%. The CASA ratio for IndusInd Bank remained flat YoY at 42%.
Banks have started to aggressively increase rates to garner more deposits to support the loan growth and this is likely to impact margins in coming quarters. The weighted average lending rates (WALRs) on fresh rupee loans have increased by 117 bps between May and October, while the weighted average domestic term deposit rate on fresh deposits increased by 150 bps during the same period, the Reserve Bank of India data showed.