Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Liquidity has improved sharply, leading to a sharp fall in three-month certificate of deposit rates.
In general, a sustained fall in short-term borrowing rates should be positive for NBFCs (Buy IDFC
and PFC). We remain cautiously optimistic on the sector (Buy SBI and HDFC Bank).
Loan growth appears to be moderating; deposit growth seems stable
Loans grew 21.4% yoy, while deposits grew 15.8% yoy, as of 26 March 2011. Loan growth has
moderated from its high of 23-24% in December 2010, while deposit growth has been largely
stable, in the range of 15-16% (see Table 1). In general the first half (April-September) of the
financial year is a lean period for loans, so loan growth will likely moderate further in 1H12.
Liquidity also appears to be improving
Liquidity has improved sharply over the past couple of days and moved into surplus mode as of 6
April (see Chart 2). The improvement could be partly due to the decline in central government
deposits with the Reserve Bank of India (Rs63bn as of 25 March 2011 vs about Rs1,000bn in
December 2010). An improvement in liquidity has led to a sharp decline in short-term wholesale
borrowing costs, as reflected by the certificate of deposit rates. The three-month CD rate has
slipped by about 150bp in the past couple of days to 8.3-8.4%. However, the one-year CD rate
has slipped only 50-60bp to about 9.4% (see Chart 3).
Infrastructure continues to drive loan growth; loans to NBFCs are growing fast
The year-to-date (April 2010 to February 2011) loan growth was 16.8% (compared with 11.1% a
year ago). Within this, loans to agriculture grew 5.3% ytd, loans to industry grew 20.4%, loans to
the services sector grew 18.3% and personal loans grew 14.8% ytd (see Table 2). Of the
incremental ytd loan growth of Rs5,097bn, infrastructure loans accounted for about 26%, loans to
non-banking finance companies (NBFCs) for 9% and housing loans for 8%.
We maintain our cautiously optimistic view; Buy SBI, HDFC Bank, IDFC and PFC
Going forward, a combination of rising deposit growth and a moderation in loan growth should
lead to a more balanced scenario for the banking sector. We remain cautiously optimistic on the
sector given our concerns on inflation, trade deficit and fiscal deficit. As earlier, we continue to
prefer public-sector banks (PSBs) to private sector banks. Our top picks of the banks we cover
are State Bank of India and HDFC Bank. A sustained fall in the wholesale cost of borrowing
should be positive for non-banks and we therefore re-iterate our Buy calls on IDFC and Power
Finance Corporation.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Liquidity has improved sharply, leading to a sharp fall in three-month certificate of deposit rates.
In general, a sustained fall in short-term borrowing rates should be positive for NBFCs (Buy IDFC
and PFC). We remain cautiously optimistic on the sector (Buy SBI and HDFC Bank).
Loan growth appears to be moderating; deposit growth seems stable
Loans grew 21.4% yoy, while deposits grew 15.8% yoy, as of 26 March 2011. Loan growth has
moderated from its high of 23-24% in December 2010, while deposit growth has been largely
stable, in the range of 15-16% (see Table 1). In general the first half (April-September) of the
financial year is a lean period for loans, so loan growth will likely moderate further in 1H12.
Liquidity also appears to be improving
Liquidity has improved sharply over the past couple of days and moved into surplus mode as of 6
April (see Chart 2). The improvement could be partly due to the decline in central government
deposits with the Reserve Bank of India (Rs63bn as of 25 March 2011 vs about Rs1,000bn in
December 2010). An improvement in liquidity has led to a sharp decline in short-term wholesale
borrowing costs, as reflected by the certificate of deposit rates. The three-month CD rate has
slipped by about 150bp in the past couple of days to 8.3-8.4%. However, the one-year CD rate
has slipped only 50-60bp to about 9.4% (see Chart 3).
Infrastructure continues to drive loan growth; loans to NBFCs are growing fast
The year-to-date (April 2010 to February 2011) loan growth was 16.8% (compared with 11.1% a
year ago). Within this, loans to agriculture grew 5.3% ytd, loans to industry grew 20.4%, loans to
the services sector grew 18.3% and personal loans grew 14.8% ytd (see Table 2). Of the
incremental ytd loan growth of Rs5,097bn, infrastructure loans accounted for about 26%, loans to
non-banking finance companies (NBFCs) for 9% and housing loans for 8%.
We maintain our cautiously optimistic view; Buy SBI, HDFC Bank, IDFC and PFC
Going forward, a combination of rising deposit growth and a moderation in loan growth should
lead to a more balanced scenario for the banking sector. We remain cautiously optimistic on the
sector given our concerns on inflation, trade deficit and fiscal deficit. As earlier, we continue to
prefer public-sector banks (PSBs) to private sector banks. Our top picks of the banks we cover
are State Bank of India and HDFC Bank. A sustained fall in the wholesale cost of borrowing
should be positive for non-banks and we therefore re-iterate our Buy calls on IDFC and Power
Finance Corporation.
No comments:
Post a Comment