Tag: Q4

HDFC Bank, which has been hit by the Reserve Bank of India curbs on credit card issuances, saw a tepid growth in advances in the quarter ended March 2020 with total loans growing 14% on a year-on-year basis, lower than analysts’ expectations of a 16% growth.

The slowdown in loan growth was mainly due to a lacklustre rise of 7.5% in retail loans over last year. Experts attributed the drop to conscious moderation in vehicle finance and commercial vehicle lending plus a prolonged suspension in new card business acquisition.

However, the wholesale loans which though slowed sequentially grew at 21% year-on-year owing to the bank’s focus on capturing market share in better-rated corporates.

After the pandemic, the bank has changed its strategy to offset lower retail lending growth in the rest nine months of the last fiscal year through higher corporate loan growth, which grew at an average of 30% year-on-year.

The curbs

The Reserve Bank of India in December 2020 had asked HDFC Bank to temporarily stop all digital launches and sourcing new credit card customers. This after the bank suffered its third big outage in the span of just two years.

The RBI has advised to stop all launches of the Digital Business generating activities planned under its program – Digital 2.0 (to be launched) and other proposed business generating IT applications and (sourcing of new credit card customersHDFC bank said in an exchange filing

“The above measures shall be considered for lifting upon satisfactory compliance with the major critical observations as identified by the RBI.”

Other banks

IndusInd Bank too reported loan growth slowing significantly with a 3% growth over March last year. Though deposits grew at a healthy pace of 27% though on a low base. Yes Bank too reported tepid loan growth numbers with a 0.8% rise in advances over last year. It more than doubled its retail disbursements over March quarter last year when it had faced a moratorium from the Reserve Bank of India. Its deposits grew at 54.7% bulk of which came from current and savings accounts. Private lender Federal Bank also reported a 9% growth in its advances over the same period last year while deposits grew 13%.The year ahead

Banks are likely to report lacklustre loan growth numbers in the quarters ahead. The system loan growth at 6.5% for the fortnight ended March 12, remaining weak due to low credit demand. Deposit growth at over 12% continues to outpace credit. Almost Rs 5.4 lakh crore of excess liquidity parked in the reverse repo window March shows the risk aversion in the banking system.

Subscribe to ETBFSI Daily Newsletter and stay updated.
https://bfsi.economictimes.indiatimes.com/etnewsletter.php