In the third quarter of the fiscal year 2024, both public sector and private banks, alongside non-banking financial companies (NBFCs), displayed remarkable resilience and growth, as evident from the impressive figures released in their provisional reports.
The banking sector witnessed robust credit growth, with figures ranging from 11% to 23% year-on-year. YES Bank, South Indian Bank, and Dhanlaxmi Bank posted credit growth at the lower end of 11-12%, while IndusInd Bank, Bank of Maharashtra, and CSB Bank stood out with significant growth rates at the higher end, ranging from 20% to 23%. Notably, small finance banks showcased extraordinary performance, with Suryoday Small Finance Bank leading the pack with a staggering 41% year-on-year loan growth.
Punjab National Bank (PNB) and Bank of Maharashtra (BoM) posted commendable advances. PNB recorded a robust 13.5% growth in advances, reaching Rs 9.72 lakh crore, while BoM achieved a substantial 20.28% increase in loan growth, amounting to Rs 1.88 lakh crore.
NBFCs shine in credit expansion
The non-banking financial sector also contributed to the positive economic narrative, with key players like Bajaj Finance, Mahindra Finance, and Poonawalla Fincorp reporting substantial credit growth. Bajaj Finance and Mahindra Finance reported an impressive increase of 35% and 25%, respectively, in their assets under management. Poonawalla Fincorp, with a smaller asset base, outperformed expectations, boasting an outstanding 57% year-on-year growth.
Deposits grow
Most banks maintained a steady growth trajectory in deposits during the quarter, although deposit growth generally lagged behind loan growth. However, small finance banks emerged as outliers, experiencing an accelerated rise in deposits, ranging from 29% to 38%. This surge is attributed to these banks offering higher interest rates on savings accounts and fixed deposits to attract deposits and fortify their liability profiles.
Current account savings account (CASA) ratios for banks, excluding outliers, experienced a decline from the year-ago period. CASA deposits, a traditional stable source of funds, faced pressure as investors shifted funds to term deposits. The industry experienced a shift in deposit dynamics, underscoring changing preferences among investors. Despite the positive figures, concerns linger over the decline in CASA ratios for several banks. The industry will closely monitor how these financial institutions navigate the changing deposit landscape and adapt strategies to maintain a balanced and resilient portfolio.
ETBFSI now has its WhatsApp channel. Join for all the latest updates.