Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    
Google
Web www.equitybulls.com
Interesting Articles

| More

Banks - Surprising but unsustainable - Sector Update - HDFC Securities

Posted On: 2020-05-05 12:34:02


Contrary to our expectations, non-food credit grew 7.6% YoY in Mar-20 (vs. 7.3% in Feb-20). Further, MoM growth came in at 4.2% (vs. 3.9% in Mar-19). The increase in Mar-20 accounted for 57% of the increase in FY20. While Mar has a/c for an increasing proportion of incremental (annual) non-food credit, the persistence of this trend in FY20 is surprising, in light of COVID-19 related disruptions. Much of the growth in Mar-20 was supported by credit for industries and services (~87% of incremental Mar-20 credit).

Industrial credit grew at 1.4/4.8% YoY/MoM (vs. 4.2% MoM growth in Mar19), led by 1.3% YoY growth in credit to large industries (5.2% MoM, ~83% of industrial credit). Within industrial credit trends, sectors such as petroleum, coal and nuclear products (29.3% MoM), chemicals and chemical products (10.7%, led by fertilisers) and telecom (2.6%) stood out.

Growth in credit for services accelerated to 8.5% YoY, vs. 6.9% in Feb-20 but was substantially slower than 17.8% in Mar-19. Seemingly relatively risky sectors continued to witness rapid growth (NBFCs +27.7/16.4% YoY/MoM, CRE +13.7/0.5%, and now tourism, hotels and restaurants +18.4/2.2%).

While YoY growth in personal loans was strong at 15.7%, growth here appears to be slowing. MoM growth at 1.4% was slower vs. Mar-19 (2.7%) and Mar-18 (2.9%). Growth in credit card debt came in at 22.5% YoY vs. 33.0% YoY in Feb-20, with slight MoM de-growth vs. 5.8% MoM growth in Mar-19. Home loan growth slowed to 16.3% YoY (the slowest since Sep-18).

These seemingly anomalous trends may be a consequence of (1) Substantial portion of industrial and service growth coming towards the end of the year (as seen earlier too), (2) Higher than usual utilisation of undrawn limits by corp and SME borrowers, and (3) Possibly reduced demand and higher risk aversion by banks towards personal loans.

The bump up in non-food credit growth is unlikely to sustain, given, (1) The growth arising from higher utilisation of undrawn limits is likely to be 'one time', (2) Demand for personal loans which has been supporting overall credit growth is likely to see a significant fall, which will not be compensated for by growth in other segments, and (3) Banks are likely to turn more risk averse. Our coverage banks reported a credit growth of ~16% over FY16-19 vs. nonfood credit growth of ~10% over the same period. We expect our coverage to exhibit a ~7% credit growth over FY21E.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com





Other Headlines:

How to apply for Rights Issue of Arvind Fashions Limited?

How to apply for Rights Issue of Aditya Birla Fashion and Retail Limited?

An insight on Aarti Surfactants Limited

Covid-19 and its impact on businesses

Nifty Gained 8% in the June Series, Bank Nifty Surged 12%-Highest Since March 19 - HDFC Securities

IMF Growth Revision for India - Acuité Ratings & Research

Co-operative Banks - RBI Supervision - Acuité Ratings & Research

HDFC Securities views on relaxations announced by SEBI

India can reduce China trade deficit by over $8 billion in FY21-22 - Acuité Ratings & Research

How can investors preserve their wealth during times of crisis

JM Financial Yield Enhancer (Distressed Opportunity) Fund I raises Rs.160 crore in its first close

Samco Securities launches BTPT - Buy Today, Pay In Two days for Investors Buying Stocks

No data breach of BHIM app: Report

India's sovereign rating downgrade by Moody's - Acuité Ratings & Research

Banking Sector Credit Trends - Unusual trends - HDFC Securities

Rollover Report for May - June 2020: Angel Broking

Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research on Q4 GDP

Mr. Dhiraj Relli views on GDP Numbers - HDFC Securities

Banking Sector Update - NIM compression on the cards - HDFC Securities

May series ends with a bang: Angel Broking

May 2020 F&O Series Expiry - Mr. Nandish Shah, Technical Research Analyst, HDFC Securities

Views on Impact of Locusts Attack on Agriculture - Acuité Ratings & Research

ICAI establishes Center for Audit Quality

Bharti Telecom raised over Rs. 8433 crores through Accelerated Book-build offering of equity shares of Bharti Airtel

SATYA MicroCapital raises INR 105 crore equity funding from Japan-based Gojo & Company Inc.

Mr. Rajnish Kumar, Chairman, SBI & IBA on the announcements made by RBI today

Views of Mr. Umesh Revankar, MD and CEO, Shriram Transport Finance on RBI announcement

Views of Mr. George Alexander Muthoot, MD, Muthoot Finance on RBI announcement today

Views of Ms. Anagha Deodhar - Economist, ICICI Securities on the RBI announcement today

Views on RBI Policy announcement today - Federal Bank

RBI Monetary Policy (May 2020) by Shanti Ekambaram, Group President - Consumer Banking, Kotak Mahindra Bank

Religare Finvest Ltd. on today's monetary policy by RBI

RBI monetary policy announcement - Mr. Jyoti Roy, DVP Equity Strategist, Angel Broking Ltd

RBI's proactive measure will help revive economy: Dr.Niranjan Hiranandani

Mr. Dhiraj Relli views on today's announcement made by RBI

Views of Mr. R K Gurumurthy, Head - Treasury, Lakshmi Vilas Bank on the RBI announcement today

Suvodeep Rakshit, Vice President & Sr. Economist, Kotak Institutional Equities on RBI announcement

Suman Chowdhury, Chief Analytical Officer at Acuité Ratings & Research, on today's RBI announcement

General Insurance Sector Update - GDPI continues to decline due to Lockdown - HDFC Securities

Stress in Banking Sector to Continue: Geojit Financial Services

Banking Sector Update - What have banks said - HDFC Securities

Satyam Shivam Sundaram, EY India on measures announced by Finance Minister today

HDFC Securities: Mr. Dhiraj Relli views on Fourth Set of Economic Measures announced by Finance Minister

Structural intervention to spur investments - Ramesh Nair, CEO and Country Head (India) JLL

MNCs & their unlisted subsidiaries - A case of misplaced premium & forgotten risk

India Equity Strategy - FM's package: Addressing liquidity concerns - HDFC Securities

Mr. Umesh Revankar, MD and CEO, Shriram Transport Finance on package announced by FM

Mr. Rajnish Kumar, Chairman, SBI on FM's announcement

Central Government's Atmanirbhar Bharat Initiative - Tata Projects Ltd

FM Stimulus View: Mr. Shachindra Nath, Executive Chairman at Ugro Capital







Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019