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Published on 7/12/2018 11:05:28 AM | Source: Motilal Oswal Securities Ltd

Financials - Acceleration in credit growth to 14.7% and deposit growth to 8.9% - Motilal Oswal

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Acceleration in credit growth to 14.7% and deposit growth to 8.9%

*  System loan growth for the fortnight ended 23rd Nov’18 improved to 14.7% (v/s 14.5% in the previous fortnight). The outstanding credit base, thus, increased by INR207b to INR91.3t. This growth was majorly contributed by retail housing (18% YoY) and credit cards (31% YoY), while growth was subdued in agriculture (8% YoY) and industry (~4% YoY).

*  Deposit growth accelerated to 8.9% (v/s 8.6% in the previous fortnight). Outstanding deposit base, thus, decreased to INR118.1t (v/s INR118.2t in the previous fortnight), resulting in a higher systemic credit deposit ratio of 77.3% (v/s 77.0% in the previous fortnight). Incremental LD ratio for the system is showing an uptrend over the past five months (Exhibit 5).

*  Systemic SLR ratio declined to 27% as on 23rd Nov’18 (v/s 29% a year ago), indicating a pick-up in credit growth. Further relaxing of SLR requirement by the RBI in its recent MPC meeting will support loan growth, especially in a scenario where deposit growth is lagging loan growth.


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