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

Provisional figures for Q1FY24 released by banks and NBFCs show that both credit and deposit growth remained robust during the quarter led by sustained demand for retail credit and pick-up in corporate loans.

Of the numbers declared so far, most lenders posted growth in advances or AUM (assets under management) of over 14 per cent with sector leaders HDFC Bank and Bajaj Finance seeing growth of 16 per cent and 32 per cent y-o-y, 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 per cent, similar to last quarter.

While Q1 is typically a slower quarter for lenders, most of these players also reported 4-6 per cent growth in advances sequentially.

Sustained credit growth, especially by retail-oriented lenders, reflects that domestic consumption and the demand for credit remains strong, despite rising interest rates and elevated inflation.

YES Bank and Bandhan Bank continued to underperform the sector, posting credit growth of below 15 per cent, in the range of 6-8 per cent y-o-y. Both the lenders have been running down their microfinance and corporate exposures, respectively, leading to overall muted growth. Bandhan Bank’s advances fell 5.5 per cent on quarter.

Deposit accretion too maintained its momentum and most major lenders reported deposit growth of over 13 per cent y-o-y, barring RBL Bank, South Indian Bank, and Dhanlaxmi Bank. Sequential trends too showed steady deposit growth, albeit RBL Bank, YES Bank, Bandhan Bank, and Dhanlaxmi Bank likely slowed down deposit mobilisation due to muted loan growth. CSB Bank’s deposits were 0.1 per cent lower sequentially.

HDFC Bank saw muted q-o-q growth in both advances and deposits, as the bank is expected to have minimised balance sheet growth ahead of the merger of HDFC with itself effective July 1. The lender’s advances were up 0.9 per cent and deposits 1.6 per cent.

Banks such as HDFC Bank, IDFC First Bank, Federal Bank, YES Bank, and Bandhan Bank saw their deposits growing faster than advances on a y-o-y basis. Bajaj Finance’s fixed deposits also surged by 46 per cent, albeit on a much smaller base.