Private banks report strong loan growth in Q1FY23

A clutch of private banks reported strong provisional loan growth numbers 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 slower than loans for most banks during the quarter.

HDFC Bank’s advances grew 21.5% year on year (YoY) to Rs 13.95 trillion as on June 30, 2022. Gross of transfers through inter-bank participation certificates and bills rediscounted, the bank’s advances grew 22.5% over June 30, 2021. Retail loans at the country’s largest private lender grew 21.5% YoY in Q1, commercial and rural banking loans grew 29%, and corporate and other wholesale loans grew 15.5%.

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

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

Federal Bank’s gross advances grew 16.3% YoY to Rs 1.54 trillion as of June 30, 2022. Its retail credit book grew 16.7% while the wholesale credit book grew 15.8%. Total deposits grew 8.2% YoY 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.

IndusInd Bank’s net advances grew 18% YoY 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 grew 16.16% YoY to Rs 16,333 crore and its total deposits grew 8.65% to Rs 20,267 crore. The lender’s gold loan portfolio grew over 26% YoY to Rs 7,099 crore.

AU SFB’s gross advances grew 42% YoY to Rs 49,366 crore and its deposits grew 48% to Rs 54,631 crore.

While FY23 has so far been marked by double-digit growth in credit for the banking system, analysts observed that the growth has not been evenly spread out across segments. In a report dated June 30, Kotak Institutional Equities (KIE) said loan growth is being led by the metropolitan segment off a low base.

“Growth is stronger in smaller ticket loans. Demand on working capital is improving but still weak. Even as private banks are leading on loan growth, we are seeing recovery in public banks as well,” KIE said.

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