Apr 03, 2013, 09.59 PM IST | Source: Moneycontrol.com

Bank loans miss FY13 RBI projection; grow 14% yoy

The non-food credit grew at a slower pace falling short of the Reserve Bank of India's projection at 16% for the entire industry in 2012-13. It expanded a little more than 14% year-on-year to about Rs 51.66 lakh crore for the fortnight ended March 22, 2013. It is the lowest growth since September, 2009.

Saikat Das

The non-food credit or the amount banks lend to individuals and companies grew at a slower pace falling short of the Reserve Bank of India's projection at 16% for the entire industry in 2012-13. It expanded a little more than 14% year-on-year to about Rs 51.66 lakh crore for the fortnight ended March 22, 2013, showed RBI data released on Wednesday.

"In the last quarter (Jan-March) loan growth did not happen as it was expected," Sudhir Kumar Jain, Executive Director  Bank of Baroda told moneycontrol.com.

"We have seen generalized credit expansion in mid corporates. Select large companies along with some non-banking finance companies too added our loan growth. Neither fresh investment nor credit demand is happening due to slowing down economy. There is certainly no growth in infrastructure sector loans. After a long time, banking industry failed to achieve RBI growth projection as the data speaks," he said.

India's GDP growth hit 15-quarter low at 4.5% for the quarter ended October-December, 2012. Current account deficit (CAD) or total savings minus total investments soared record high at 6.7% during the same time. The elevated level of higher CAD is restraining RBI to reduce policy (repo) rate, at which banks borrow money from the central bank. Accordingly, companies are holding on their expansion plans due to high cost of borrowings.

"Normally, banks credit growth happens in line with RBI projection but with a corridor of 100 bps plus-minus. This time, it stretched to 200 bps, which is not usual. Since September, 2009; it is the lowest loan growth that took place," said a banking analyst from a large domestic brokerage associated with a bank.

However, RBI figures mentioned in the release are provisional to an extent, especially in respect of such banks which have not been able to submit final figures. In the last fortnight between March 08 and 22, 2012; lenders lent around Rs 82,000 crore.

According to R K Bansal Executive Director, IDBI Bank , credit growth spurts to the maximum extent in the last ten days of the financial year. It is quite possible that final figures to till March 31, 2012; may be close to 16%.

"Our bank has done good business in retail loans. We have seen quarter on quarter growth in our home loan portfolio. However, it was not above expectation," he said.

Also read:  Urban Housing Fund norms to be finalised shortly: NHB head

Meanwhile, deposits growth too did not attain RBI projection, which stands at 15% for 2012-13. Banking industry grew its deposits by 14.25% to about Rs 67.51 lakh crore.

Banks are struggling to get public deposits, the cheap source of funds. To mop up deposits lenders are not cutting rates despite 100 bps reduction in the repo rate since April, 2012.

"Deposit rates are not falling due to banks' own compulsion. Banks have not been able to transmit policy action more than 50%. If lenders decrease lending rates only, it will contract their net interest margin," said Ananda Bhoumik Director, India Ratings.

Earlier, RBI had revised both its credit and deposit growth projections from 17% and 16% respectively due to sluggishness in the industry.


HDFC Bank stock price

On April 21, 2014, at 15:46 hrs HDFC Bank was quoting at Rs 716.60, down Rs 1.95, or 0.27 percent. The 52-week high of the share was Rs 760.50 and the 52-week low was Rs 528.00.

The company's trailing 12-month (TTM) EPS was at Rs 33.52 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 21.38. The latest book value of the company is Rs 150.97 per share. At current value, the price-to-book value of the company is 4.75.

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