March 28: Emkaynomics Fortnightly round up of key banking and economic indicators

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Emkaynomics Fortnightly round up of key banking and economic indicators ·      Non-food credit growth for the period ended March 9th came in upwards at 16.2% yoy. Assuming a 2% f-o-f# increase in credit demand (also equivalent in FY11), we expect credit growth for FY12 to come in at ~16% yoy.  ·      Deposit growth has remained fragile for better part of Q4 and came in at 13.8% yoy. Growth in TD has eased to sub-16% levels. Assuming 1% f-o-f# growth in deposits we expect growth to come in at sub-14% yoy for FY12 ·      An uptick in credit demand with corresponding easing in deposit base has resulted in CD ratio in recent times. CD ratio has moved upwards to 77% levels. Inc. CDR stood at 85% levels.  TTM CD too stood at 88% levels ·      Feb’12 WPI inflation at 6.95% was primarily driven by higher primary food inflation 6.1% vs -0.5% in Jan’ 12. Decline in manufacturing inflation at 5.7% was accompanied by a sharper MoM 95bps drop in core inflation ·      M3 growth has eased further to 13.2% levels, clearly reflecting slowing investment and savings demand. LAF window continues to remain in deficit mode with average borrowings at Rs1.4tn (2%+ of NDTL) for whole of Mar’12 ·      CRR cut + OMO operations have done fairly well to hold on rates. However, concerns on inflation due to fuel price hike and longer than expected time for monetary easing has resulted in increase in yields ·      Long-end/short-end G-sec stood at 8.4%/8.16% as at 23rd Mar, 2012. However, the spreads between the long and short end OIS have widened further to over -200bps now *f-o-f denotes fortnight over fortnight

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