Mid-rung lenders register 12-26% credit growth in Oct-Dec quarter

Sequentially, few banks have reported higher deposit growth than credit growth

As many as five mid-rung banks have reported credit growth in the range of 12–26 per cent year-on-year (YoY) in the October–December quarter (Q3). The banks’ deposit growth however has lagged, their business update for Q3 shows. 

But on a sequential basis, a few of the banks have reported higher credit growth than deposit growth. Overall, banking system credit growth has outpaced deposit growth by quite a margin until now.

The latest Reserve Bank of India (RBI) data shows an 800-basis point (bp) gap between credit and deposit growth rates. The five banks have posted a deposit growth in the range of 3–19 per cent in Q3 of FY23.

Most banks reported a drop in their current account savings account (CASA) ratio. They continued with the trend witnessed in Q2 earnings, whereby accretion of low-cost deposits saw moderation. This was because lenders have been raising interest rates on term deposits to get durable liquidity to fund high credit growth.

Public sector lender Bank of Maharashtra has reported a 22 per cent YoY growth in advances to Rs 1.57 trillion in Q3 while deposits have grown by 12 per cent to Rs 2.08 trillion.

On a sequential basis, advances of the lender grew 6.02 per cent while deposits grew 6.42 per cent. The CASA ratio, however, has gone down to 52.50 per cent as of December 2022.

In the case of Federal Bank, advances grew 19 per cent YoY and 4.32 per cent sequentially to Rs 1.71 trillion. Deposits rose by 14.8 per cent YoY and 6.49 per cent sequentially to Rs 2.01 trillion in Q3. According to the banks’ internal classification, retail credit book grew by 19.1 per cent and wholesale credit book rose by 19 per cent, with retail to wholesale ratio at 54:46.

The Kochi-based bank also saw its CASA ratio drop sequentially to 34.25 per cent as of December quarter. It was 36.41 per cent in Q2. Thrissur-based South Indian Bank reported 18 per cent YoY growth and 3.24 per cent sequential growth in advances to Rs 70,168 crore in Q3. 

In line with other banks, CSB Bank also reported a drop in CASA ratio to 33.84 per cent as of the December quarter. 

Similarly, Karnataka Bank reported a 12.37 per cent YoY growth in advances to Rs 63,658.59 crore while deposits were up almost 10 per cent to Rs 84,592 crore.