Gross bank credit offtake witnessed an increase of 19% year-on-year (y-o-y) in April 2024 propped by the impact of the merger between the HDFC twins and by growth in personal loans and commercial real estate.
Without considering the merger, the y-o-y growth stood at 15.3%, lower by 60 bps than last year’s growth number of 15.9%.
Ahead, bank credit is expected to remain positive, supported by economic expansion, increased capital expenditure, and retail credit growth, according to a CareEdge report.
Lending to businesses (industry + services) increased by 15% in April 2024 compared to the 14.2% reported in April 2023. Excluding the merger impact, the growth stood at 13.4% in April 2024.
The services segment reported a rise of 21.7% y-o-y in April 2024 due to growth in trade, commercial real estate, and Non-Banking Financial Services (NBFCs). Industry segment grew by 7.4% y-o-y in April 2024, led by Micro, Small & Medium Enterprises (MSME) growth.
Meanwhile, personal loans segment witnessed a robust growth of 27.1% y-o-y mainly due to the impact of the merger. Excluding the merger impact, on a y-o-y basis, the growth rate reduced by around 200 bps
to 17.4% in April 2024 due to slower growth in vehicle loans and other personal loans which offset the higher growth in housing.
Industry
In April 2024, the y-o-y growth rate of the industry loans declined to 7.4% from 9.0% in March 2024, but showed an increase from 7.2% recorded in April 2023. However, if the merger impact had been excluded, growth would have been slower at 6.9% in April 2024. Among major industries, growth in chemicals & chemical products, food processing, and infrastructure accelerated in April 2024 as compared with April 2023. Credit expansion for ‘basic metal and metal products’ decreased, while it contracted for ‘petroleum, coal products, and nuclear fuels’. The credit to large industries declined to 4.7% y-o-y in April 2024 compared to 6.2% in April 2023.The infrastructure (sub-segment, within the industry 36.2% share) witnessed a credit growth of 4.9% y-o-y in April 2024 vs. 3.4% in the year-ago period due to growth in roads, telecommunications, power, and railways (excluding Indian Rail), which offset a drop in ports and airports. The power segment (the largest segment of infrastructure, with a share of 50.4%) witnessed a growth of 3.0% in April 2024 vs. a rise of 2.2% in April 2023. Meanwhile, the credit offtake for roads declined by nearly 200 bps i.e. 7.0% y-o-y in April 2024 from 8.9% in April 2023.
Housing loans
Housing loans grew by 36.9% y-o-y in April 2024 compared to 13.9% a year ago mainly due to the merger (reclassification of HDFCs’ advances), sales of high-value residencies, strong launch pipeline of residential projects and incentives & schemes offered by developers. Excluding the merger, the growth has remained strong at 17.7% in April 2024.
Vehicle loans registered a lower growth of 16.9% y-o-y in April 2024 as compared to 22.3% in the year-ago period. The continued growth, albeit slower compared to previous periods, can be attributed to higher sales of passenger vehicles especially SUVs and two-wheelers. Passenger vehicles and commercial vehicles are expected to drive demand.
