Expect credit growth of 13.5% in FY13: Prabhudas Lilladher

Prabhudas Lilladher has come out with its report on financial sector. The research firm continues to maintain that industrial credit growth will continue to moderate and expect 13.5% growth in FY13 and ~15% growth in FY14.

RBI`s Dec-12 sectoral credit trend indicates that credit to services has also slowed down along with the moderation in industrial credit seen in the last 6-9 months. Credit offtake for MSME continues to remain muted (7% YoY growth) and capex- related credit offtake by larger corporates which had held up better-than-expected is also moderating now. Retail remains the only bright spot, with strong growth across secured/unsecured segments.

• Credit offtake by Services segment moderates:
•  Credit offtake by services has moderated to 10% YoY growth v/s 14% YoY growth in Sep-12, driven by sluggishness/risk aversion in CV lending (9% YoY) and also slowing credit offtake by NBFCs as reliance on market borrowings by NBFCs is on a rise (NBFC credit growth of 20% YoY v/s 31% in Sep-12).
• But all is not complete gloom in services credit offtake as Trade services is holding firm at +20% YoY credit off take and there seems some initial pick-up in off take by commercial real estate space.
• Industrial Credit .Down to 14% YoY growth:
• MSME growth continues to remain muted at just 7% YoY growth. But large corporate, where credit growth has been holding up, is finally showing signs of material moderation (13.7% YoY growth v/s 16% in Sep-12).
• Within large corporates, Infra (ex telecom) has held up better-than-expected at ~19% YoY growth with power book (~23% YoY) aided by past sanction and more importantly some SEB disbursements. Roads segment is showing signs of moderation with just ~16% YoY growth v/s 19% in Sep-12.
• Most significant deceleration has been in non-Infra industrial credit growing by just 13% YoY v/s 16% growth reported in Sep-12. Credit off take by capex intensive sectors which has been holding up. H1FY13 is now showing signs of moderation, with a significant dip in credit offtake by the construction space. Cement and to some extent metals remain bright spots.
•  Personal Loans . The bright spot: 
• Growth in personal loan (17% YoY) is being supported across the segments- Housing, Auto, credit cards. While retail push amidst competitive rate cuts is keeping the growth in mortgages strong, vehicle loan growth has remained robust at ~22% YoY, which we believe, is led by UV credit offtake.
• Unsecured loan growth (credit cards) have now inched up to ~27% YoY v/s 13% YoY growth in Mar-12 and 22% growth in Sep-12. 
• Overall, we continue to maintain that industrial credit growth will continue to moderate and we expect 13.5% growth in FY13 and ~15% growth in FY14.

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