Banks Sectoral Credit - Growth Slowed Down Due To High Base: IDBI Capital

IDBI Capital Report

Banking sector (non-food) credit growth moderated to 13.7% YoY in July 2024 (@15.1% YoY excluding HDFC Ltd.) versus 17.4% YoY in June-24 led by slowdown across services and retail sector.

Services sector growth slowed to 14.0% YoY (at 15.4% ex HDFC Ltd.) versus 17.4% YoY in June-24 led by slower growth in most segments. However, NBFCs’ growth increased to 12.7% on a YoY basis in July 2024 versus 8.5% in June-24. Retail portfolio growth was slower at 14.4% YoY (at 17.8% ex HDFC Ltd.) versus 25.6% in June-24, majorly due to housing, credit card and education loans.

However, loans to industries grew by 10.1% on a YoY basis (at 10.2% ex HDFC Ltd.) in July-24 versus 8.1% in June-24. Deposit growth continued to moderate and stood at 10.9% as on Aug 09, 2024 (as compared to 13.8% on March-24).

Going forward, we need to monitor the impact of increased risk weight changes in personal loans, credit cards and NBFC on credit growth in FY25. Among our banking coverage, our top picks are City Union Bank, IndusInd Bank and ICICI Bank.

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