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Banks are expected to remain strong Credit growth In the January-March quarter, on the back of healthy consumption trends and improving corporate credit growth.
Public sector banks have performed better than private banks in the past. Banks expect margin trajectory to remain strong, while improved asset-quality resolution will further fuel profitability.
“India’s banking sector has seen a clear improvement in 2022, led by stronger-than-expected loan growth after years of sluggish performance, sharp margin hikes benefiting from the rate cycle and now a much stronger balance sheet,” said senior Anand Dama. Research Analyst at MK Global Financial Services. “We are bullish on the sector and want to ICICI Bank, Axis Bank, IndusInd Bank, State Bank of India And Bank of Baroda.”
Latest data by Reserve Bank of India Would recommend it Bank Loans rose nearly 18% in November, compared with 7% a year earlier, reflecting buoyant demand from individuals and firms despite an increase in financing costs since the start of the summer.
Credit to industry continued to register a strong pickup, with total loans increasing by 13.1%, while personal loans increased by 19.7% in November, driven mostly by housing and auto loans.
Over the past two years, credit off-take has largely overcome the Covid-induced setback and recorded a growth of nearly 25.2% with deposit growth of 27.3% during the same period.
“Following two years of muted growth with a recovery in economic activity, credit to the banking sector picked up smartly in FY23,” said Ashay Choksi, Vice President & Department Head-Financial Sector Estimates. Death Penalty.
“The improved capital position, coupled with growing appetite for growth, should help banks continue on their recent performance track. However, we are cautious about a sharper-than-expected increase in systemic interest rates and the impact on asset quality,” Choksi said.
Capacity utilization stood at 72.4% in the June quarter, higher than the average level of 71.3%, indicating positive capex-led demand for the following quarters, analysts said. Also, debit bounce rates have remained largely stable since April 2022 and are at four-year lows, indicating strong asset quality.
“Strong Credit growth Trends in retail, industrial and services sectors are encouraging,” said Suresh Ganapathy, Associate Director, Macquarie Capital. “In the past, sectors like cement and steel have seen good growth momentum since July 2022. This boom may be a combination of increased employment. Capital requirements and some return on capex-led demand.”
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