BFSI Q1 Review - Disappointing Quarter Barring The Seasonality, All Eyes On Deposit Accretion: Axis Securities

Axis Securities Report

Banks (including small finance banks) under our coverage continued to report healthy credit growth at ~15% YoY (ex-HDFC Bank), marginally lower than our expectation of ~16% YoY (ex-HDFC Bank).

This growth was largely led by the retail/small and medium enterprise segment, with a moderation in unsecured segment growth for certain banks. The trends in corporate portfolio were divergent, with certain banks pointing out intense competition and unfavorable pricing resulting in them not pursuing growth in the segment, while certain banks witnessed strong demand-led growth.

Deposit growth during the quarter disappointed and was sluggish for most banks (considering the seasonality). Deposit mobilisation was mainly through TDs while CASA Ratios continued to decline. Resultantly, credit-deposit ratios inched up QoQ. Public sector banks continue to remain better placed than their private sector peers in terms of comfort on the C-D ratio, with scope to accelerate credit growth.

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