Some private banks have released business updates for FY 2025 (3rd quarter of FY 2025). It mainly contains details of the growth of advances and deposits. However, this data has been provided only by some banks and from this we can understand some trends and the complete picture will become clear only when the quarterly results are announced in the coming days.
In December 2024, HDFC Bank’s advance growth declined by 3% on an annual basis. The slowdown in growth is as per the guidance and is also being done deliberately, so that the credit-deposit ratio can be improved. HDFC Bank’s securitized/assigned loans stood at Rs 21,600 crore during the third quarter. The loan growth of other private banks like Bandhan Bank, Yes Bank and IndusInd Bank increased by 12 to 15 percent on an annual basis. The growth of CSB Bank was 26 percent on annual basis. The main reason for the sharp increase in bank loan growth was the increase in gold loans. CSB Bank’s loan growth during the relevant period was 36 percent on an annual basis.
Deposit growth was slightly better for HDFC Bank in the corresponding period and due to this there was a slight improvement in the credit-deposit ratio.
What is the broad trend in the banking sector?
After a growth of 14-16% in the banking sector during the last two years, credit growth declined to 10.5%. The reason for this slowdown in loan growth is the high base effect created by the merger of HDFC and HDFC Bank. Apart from this, the steps taken by the Reserve Bank regarding unsecured lending have also shown adverse impact on loan growth. Loan growth remained sluggish due to concerns over high credit deposit ratio. Apart from this, the main reason for the slowdown is the slow growth in the personal loan and services segment.