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The 3 month CD rate has cooled off to about 8.5% from 9.8% level a month back. The YTD
deposit growth was Rs 1,367bn; loan growth was Rs 731bn and investments grew by Rs
1,038bn ytd. A moderating loan growth and steady deposit growth should lead to a more
balanced scenario.
3 month CD rate is down by about 100-120bps over the last one month
The 3 month certificate of deposit (CD) rate has come down by 100-120bps over the last
one month to about 8.5% as of 29 June 2011 (9.2% average for June 2011 till date).
The 12 month CD rate remains elevated at about 9.8% (down 30bp month on month).
Sector data update (for the fortnight ended 17 June 2011)
Deposits came down by Rs 329bn in the fortnight ended 17 June 2011 (Rs 583bn growth
in the previous fortnight). Deposit growth was 18.2% yoy as of 17 June 2011 (13.9% yoy
as of 18 June 2010).
Loans grew 21.1% yoy as of 17 June 2011 (19.6% yoy as of 18 June 2010). Absolute net
loans grew Rs 348bn in the fortnight ended 17 June 2011 (vs Rs 283bn growth in the
previous fortnight).
Banks have been net borrowers from RBI to the tune of about Rs 728bn average daily in
June 2011 till date (about Rs 535bn average in May 2011).
YTD growth: loan growth moderating; deposits steadily picking up
The ytd growth in deposits was about Rs 1,367bn (+2.6% ytd) and the ytd loan growth
was Rs 731bn (+1.9% ytd), implying an incremental ytd loan to deposit ratio of about
53.5%. Investments increased by Rs 1,038bn ytd (+6.9% ytd).
The sharp rise in lending rates (base rate close to 10%) may slow loan growth further
and the increase in deposit rates will likely keep deposit growth steady. Going forward,
we believe this combination of steady deposit growth and a moderation in loan growth
should lead to a more balanced scenario.
The key risk to the investment argument will be a sustained flattening of the yield curve which
will put pressure on net interest margins.
We recently upgraded Axis Bank and ICICI Bank to Buy; HDFC Limited to Hold.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
The 3 month CD rate has cooled off to about 8.5% from 9.8% level a month back. The YTD
deposit growth was Rs 1,367bn; loan growth was Rs 731bn and investments grew by Rs
1,038bn ytd. A moderating loan growth and steady deposit growth should lead to a more
balanced scenario.
3 month CD rate is down by about 100-120bps over the last one month
The 3 month certificate of deposit (CD) rate has come down by 100-120bps over the last
one month to about 8.5% as of 29 June 2011 (9.2% average for June 2011 till date).
The 12 month CD rate remains elevated at about 9.8% (down 30bp month on month).
Sector data update (for the fortnight ended 17 June 2011)
Deposits came down by Rs 329bn in the fortnight ended 17 June 2011 (Rs 583bn growth
in the previous fortnight). Deposit growth was 18.2% yoy as of 17 June 2011 (13.9% yoy
as of 18 June 2010).
Loans grew 21.1% yoy as of 17 June 2011 (19.6% yoy as of 18 June 2010). Absolute net
loans grew Rs 348bn in the fortnight ended 17 June 2011 (vs Rs 283bn growth in the
previous fortnight).
Banks have been net borrowers from RBI to the tune of about Rs 728bn average daily in
June 2011 till date (about Rs 535bn average in May 2011).
YTD growth: loan growth moderating; deposits steadily picking up
The ytd growth in deposits was about Rs 1,367bn (+2.6% ytd) and the ytd loan growth
was Rs 731bn (+1.9% ytd), implying an incremental ytd loan to deposit ratio of about
53.5%. Investments increased by Rs 1,038bn ytd (+6.9% ytd).
The sharp rise in lending rates (base rate close to 10%) may slow loan growth further
and the increase in deposit rates will likely keep deposit growth steady. Going forward,
we believe this combination of steady deposit growth and a moderation in loan growth
should lead to a more balanced scenario.
The key risk to the investment argument will be a sustained flattening of the yield curve which
will put pressure on net interest margins.
We recently upgraded Axis Bank and ICICI Bank to Buy; HDFC Limited to Hold.
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