Private lenders have reported a sequential improvement in the net advances for the duration of the December quarter, according to provisional information released by the banks. While the biggest private lender HDFC Bank has shown a 3% development in the loan book, IndusInd Bank and IDFC First Bank reported more than 3% quarter-on-quarter (q-o-q) development in the advances. Similarly, Yes Bank has shown a 1.3% raise in the net advances for the duration of the quarter compared to the September quarter.
An analyst from Emkay Global Financial Services stated that banks have reported q-o-q credit development mostly due to festive choose-up as financial unlocking started. Many lenders reported improvement in the retail loan book for the duration of the quarter. IDFC First reported a 11.3% q-o-q raise in its retail loan book for the duration of the quarter. Similarly, displaying a sign of improvement right after its reconstruction, Yes Bank’s gross retail disbursements more than doubled in the December quarter at Rs 7,563 crore (q-o-q).
In a note to its clientele, Kotak Institutional Equities has on the other hand, stated that loan development recovery of banks will be slower than expectations. “While credit demand is recovering from post-lockdown lows along with approval rates and share of NTC (new-to-credit) originations, we expect loan growth recovery to be slower than expectations of market participants, “ Kotak Institutional Equities said.
Private lenders have also reported strong deposit growth during the December quarter. While HDFC Bank has shown a 19% y-o-y growth in deposits during the December quarter, IndusInd Bank has registered 10.56% y-o-y growth in deposits. Similarly, Federal bank has registered a 12% y-o-y growth in the deposit numbers. Sequentially, While HDFC Bank has registered a 3% deposit growth, IDFC First Bank reported 11% increase in its deposits during the December quarter. Similarly, Yes Bank and IndusInd Bank reported a 7.7% and 5% deposit growth in the December quarter, as compared to September quarter.
Lalitabh Srivastava, assistant vice-president (AVP), research, Sharekhan, said that the low-cost deposit share of private banks is increasing as per provisional data. “So, maybe they are gaining market share, either from public sector banks or cooperative banks. Gaining deposit share was the next goal to achieve for private banks, because they were already doing better on the advances side, ” he added.
Shailendra Kumar, chief investment officer, Narnolia Financial Advisors stated that even though provisional numbers released by the private lenders had been on anticipated lines, but it will be critical to know what occurs in the moratorium accounts and the final figures of restructuring.
Kotak Institutional Equities also stated that headline asset high-quality is anticipated to worsen if the Supreme Court lifts its order that banned banks from marking defaulted loans as non-performing assets (NPAs). The slippages could be meaningfully higher in our view, it stated. The apex court had earlier directed banks not to recognise fresh NPAs, till additional orders in the interest on interest case. A public interest litigation (PIL) was earlier filed in the Supreme Court to waive off interest on interest for borrowers for the duration of the moratorium period involving March to August 2020.