Banks, NBFCs’ provisional Q1 figures show robust credit, deposit growth

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Preliminary figures for the first quarter of fiscal year 24 released by banks and NBFCs It showed that credit and deposit growth remained strong during the quarter driven by continued demand for retail credit and recovery in corporate loans.

Among the figures announced so far, most lenders have recorded growth in advances or assets under management of more than 14 percent with sector leaders HDFC Bank and Bajaj Finance seeing growth of 16 percent and 32 percent respectively. Other major lenders such as M&M Financial Services, IndusInd Bank, IDFC First Bank, RBL Bank and Federal Bank saw loan growth of 20-28 percent, similar to last quarter.

While the first quarter is usually a slower quarter for lenders, most of these players also reported 4-6 percent growth in advances back-to-back.

The continued growth of credit, particularly by retail-oriented lenders, reflects that domestic consumption and demand for credit remain strong, despite rising interest rates and rising inflation.

Yes bank Bandhan Bank continued to perform poorly in the sector, recording credit growth of less than 15 percent, in the range of 6-8 percent year on year. Both lenders were declining in microfinance and corporate risk, respectively, resulting in weaker growth overall. Bandhan Bank’s advances decreased 5.5 per cent on a quarterly basis.

Deposit build-up also maintained its momentum and most of the major lenders reported deposit growth of more than 13 per cent year-on-year, with the exception of RBL Bank, South Indian Bank and Dhanlaxmi Bank. Sequential trends also showed steady deposit growth, although RBL Bank, YES Bank, Bandhan Bank and Dhanlaxmi Bank are likely to slow deposit mobilization due to weak loan growth. CSB Bank deposits decreased by 0.1 percent compared to the previous quarter.

HDFC Bank saw slight q-o-q growth in both advances and deposits as the bank is expected to have moderated balance sheet growth before HDFC merger with itself effective 1 July. Advances from the bank rose 0.9 percent and deposits 1.6 percent.

Banks such as HDFC Bank, IDFC First Bank, Federal Bank, YES Bank and Bandhan Bank, have seen their deposits grow faster than advances year-on-year. Bajaj Finance’s fixed deposits were also up 46 percent, albeit on a much smaller base.