In Q1 FY13, private sector banks demonstrated better performance on balance-sheet expansion,
stability of margin and asset quality fronts. On deposit mobilization front, each of the private sector
banks under coverage (barring ICICI Bank) recorded higher deposit growth than the industry and
state-ownedbanks.Smaller private sector posted much higher expansion indeposit base; among
state-owned banks, IOB, PNB and Andhra Bank were ahead of its peers
Overall, banks’ deposit profile demonstrated weakening with decrease in CASA share. KVB and
Andhra Bank surprised with increase in CASA share even in such tight liquidity condition; in case of
KVB, current deposit mobilization significantly aided CASA share
Private sector banks under coverage outshined state-owned banks and industry overall in credit
disbursements. Smaller private sector banks under coverage were better off due to their lower
bases. State-owned banks (under coverage) recorded lesser credit book expansion than the
industry overall. Canara Bank moderated its credit growth to further reduce dependence on
wholesale advances and short-term corporate loans on unsecuredbasis
On asset quality front, PSU banks performance was quite dismal with sharp jump in gross slippage
ratio. SBI, UBI, Andhra Bank and BoI posted highest increase in slippages ratio on sequential basis.
IOB and OBC recorded sequential decline with higher base in Q4 FY12. Private sector banks were
better off on this front as well in our coverage universe
Though, some of the state-owned banks (under coverage) reported higher credit cost on sequential
basis but not enough to maintain PCR. Most of banks under coverage reported sequential decrease
in PCR except for OBC, Syndicate Bank and ICICI Bank
Most of banks under coverage posted further increase in outstanding restructured loan book except
SBI, HDBK, ICICI Bank and KVB. Overall, on asset quality fronts, incrementally PSU banks were
further hit with increase in gross slippage ratio, outstanding restructured loan book and decrease in
PCR
On margin front, most of banks witnessed sequential fall in margin except for OBC and PNB.
Syndicate Bank and BoI reported biggest fall in margin on sequential basis mainly due to larger fall
in credit yield on the back of downward revision in rates, much higher slippages and loan
restructuring at lesser rates
Sequential decrease in C-D ratio with downward revision in lending rates, re-pricing of liabilities with
a lag had negative impact on banks’ margin. Among PSU Banks, Syndicate Bank and Andhra Bank
recorded sequential increase in C-D ratio and among private sector banks, HDBK and ICICI Bank
posted further expansion in C-D ratio
On fee income front, most of banks recorded healthy growth on YoY basis; SBI, Syndicate Bank and
ICICI Bank were outliers with relatively lesser traction in our coverage universe
Overall, banks under our coverage took a beating on profitability level on sequential basis. OBC,
Syndicate Bank, SBI and Andhra Bank recorded improvement in RoA on sequential basis. OBC’s
performance was robust all along and could report better performance, but in case of SBI and
Andhra Bank, in spite of much higher additions to GNPL, these banks made lesser NPL provisions
and took a dent on their PCR. In case of Syndicate Bank, high tax credit succored the profitability
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