Emkay: 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 at 16.8% yoy is on a steep decline and also appears on a lower end due to the higher base-effect of previous year. Despite busy season, growth in non-food credit (till Dec-16) is up mere 1% qoq and 8% YTD

·     …resultant, RBI target of 18% yoy for FY12 appears on higher end. On other hand, growth in total deposits at 18.0% remains healthy. Time deposits are up 21% yoy. On other hand, demand/tot dep is at sub-10% and is down 12% YTD

·     CD ratio has inched upwards to 75% levels; Inc. CDR now stands at 70% levels. Money supply (M3) growth came in at 16.5% yoy. With M1 growth at 6% yoy, the ratio of M3/M1 has remained at 4.3x for long now

·     Liquidity remained tight with net outflow at ~Rs1.5tn (2.6% of NDTL) as on Dec-16. The additional borrowing programme with expectation of credit growth up-tick is likely to keep LAF in deficit mode in H2FY12

·     OMO operations enabled 10-yr/1-yr G-sec to ease by ~50bps from their recent highs. However, tight liquidity with higher borrowing programme will hold the yield curve at current levels. OMO operations could negate this effect

·     Call money witnessed sudden spike to 8.9%-9.6% levels. With easing food inflation, we expect December inflation to come in at 7.2%

·     CAD for Q2FY12 came in at US$16.9bn (US$15.9bn in Q1FY12) and flat yoy. With the YTD fiscal deficit at Rs3.5tn (85.6% of the annual target), the additional borrowing programme was fait accompli