With progress on unlocking of the economy, the trends in the business parameters for lenders are expected to show positivity on the growth front. Collection efficiencies have shown an upward trend over months while credit offtake has gradually picked up, especially in the retail and agri space. For most lenders, collections are expected to improve beyond 95% mark that was reported in previous quarter. On asset quality, headline NPA numbers will not paint a true picture given standstill classification norms. With end of restructuring window (for corporate, retail), quantum of restructuring is to be watched, which is expected to be at ~2-3% of advances better than earlier estimate.
Outlook on credit growth holds key
Recent RBI data suggests that credit growth has shown a gradual improvement since unlocking of the economy. Large private banks, HDFC Bank (provisional loan book at Rs. 1082000 crore, up 16% YoY for Q3FY21) and Axis Bank, report relatively better credit growth. Disbursement to corporate sector would stay muted amid uncertainty on capex led by capacity utilisation still below pre-Covid level, though some green-shoots are visible. MSME segment may see marginal uptick in disbursement owing to continuation of ECLGS scheme. Retail advances are expected to witness a gradual pick-up while demand in this category may near pre-Covid level. For our coverage, credit offtake is expected at ~7% YoY to Rs. 46 lakh crore.
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