Private banks report strong loan growth in Q1FY23

A group of private banks reported strong interim loan growth for the quarter ended June. HDFC Bank, Federal Bank, IndusInd Bank, CSB Bank and AU Small Finance Bank (SFB) reported double-digit loan growth in Q1FY23. Deposits grew more slowly than loans for most banks during the quarter.

Advances from HDFC Bank increased by 21.5% year on year (year-on-year) to reach Rs 13.950 billion as of June 30, 2022. Gross of transfers through interbank participation certificates and rediscounted bills , the bank’s advances were up 22.5% from June 30, 2021. Personal lending at the nation’s largest private lender was up 21.5% year-on-year in the first quarter, commercial bank lending and rural increased by 29%, and business and other wholesale loans increased by 15.5%.

During the quarter, HDFC Bank purchased loans worth Rs 9,533 crore through the direct assignment route under the housing loan arrangement with Housing Development Finance Corporation (HDFC).

HDFC Bank’s deposits totaled Rs 16.05 trillion as of June 30, 2022, up 19.3% year-on-year. Its low-cost current account savings (CASA) ratio stood at 46% as of June 30, 2022, compared to 45.5% a year ago.

The Federal Bank’s gross advances increased by 16.3% year-on-year to reach Rs 1.54 trillion as of June 30, 2022. Its retail credit portfolio increased by 16.7% while the credit portfolio of wholesale increased by 15.8%. Total deposits increased by 8.2% year-on-year to Rs 1.83 trillion as of June 30, 2022. The bank’s CASA ratio improved to 36.84% from 34.81% a year ago. year.

IndusInd Bank’s net advances grew 18% year-on-year to Rs 2.5 trillion as of June 30, 2022, while its deposits grew 13% to Rs 3.03 trillion. Its CASA ratio rose to 43.2% from 42.1% a year ago.

CSB Bank’s gross advances increased by 16.16% year-on-year to Rs 16,333 crore and its total deposits increased by 8.65% to Rs 20,267 crore. The lender’s gold loan portfolio grew by more than 26% year-on-year to Rs 7,099 crore.

AU SFB’s gross advances increased by 42% year-on-year to Rs 49,366 crore and its deposits increased by 48% to Rs 54,631 crore.

While FY23 has so far seen double-digit credit growth for the banking system, analysts have observed that growth has not been evenly distributed across segments. In a report dated June 30, Kotak Institutional Equities (KIE) said loan growth was led by the metro segment from a low base.

“Growth is strongest in small note loans. Working capital demand is improving but remains weak. Even though private banks lead in loan growth, we are also seeing a recovery in public banks,” KIE said.

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