In a recent report, analysts at Nomura claimed that public sector banks (PSBs) are increasingly losing out to the to six private sector banks when it comes to current account and savings account (CASA) deposits. “While the CASA share loss for PSU banks vs private banks was expected, we believe it was a material loss in CA market share for smaller PSUs with the top six private banks garnering ~60% of the system incremental CA,” they noted with reference to FY16.
The report also notes while when it comes to savings account growth, the shift away from PSBs in favour of private banks has been slower; larger PSBs, except State Bank of India (SBI), have lost out significantly in the last two years. When it comes to the private banks, while the report terms HDFC Bank as the ‘clear winner’, it claims that ICICI Bank has clawed back some lost ground and Axis Bank has stabilised a bit after a poor FY15.
On incremental current account deposits, while the top six private banks accounted for 60% of that during FY14–FY16, smaller PSBs have reported absolutely no growth, the report added. Similarly, in the case of incremental savings account deposits, while the top six private sector banks have garnered a 27% market share, top PSBs, excluding SBI, have seen their market share fall from 25% between FY12 and FY14 to 21% between FY14 and FY16.
The report adds that thanks to a similar lower growth in overall deposits, the CASA ratio of PSBs haven’t dropped significantly.