Banking Sector Check - Growth Momentum Softens Across Services, Retail, Industry: ICICI Securities

ICICI Securities Report

Banks’ sectoral credit deployment data for October 2023 (as of October 20, 2023) records non-food credit at Rs 154.3 trillion. Adjusted for the merger (of a non-bank with a bank), systemic non-food credit stands at Rs 148.4 trillion, up ~15.2% YoY/1.9% month on month.

Headline credit growth has remained healthy at ~15% YoY for the last few months. However, credit growth (adjusted for the merger) for October 2023 has decelerated versus September 2023 across services, industry and retail. Growth in heavyweight Nonbank financial companies and unsecured retail, including credit card, has been moderating (although it remains at greater 22% YoY).

With Reserve Bank of India increasing risk weights in November 2023, growth in these segment will likely see an adverse impact.

We believe the revival of Industry, especially large industry (current growth at less then 3% YoY), becomes all the more critical for momentum to sustain.

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