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Sector-wise analysis of credit growth
As of the last available sector level data released by the RBI
(November 18, 2011), aggregate non-food credit growth was 16.8% yy
with primary contributions from industry (20.9% y-y), services (16.9%
y-y), retail (13.4% y-y) and agriculture (7.3% y-y). We expect credit
growth to average 16.5% for FY12.
Working with 16.5% credit growth for the sector for FY12F, we have
examined what proportion of this total credit target for FY12F has been
completed so far by each of the major sectors and then compared it
with the proportionate completion over the same period in FY11 and
FY10. Looking at Figure 1, credit growth for the industry has
completed 59% of the annual target so far in FY12, compared with
51% in FY11 and 38% in FY10. When adjusted for loans given to the
power sector, industry has clocked 53% of the annual FY12 credit
target (comparable proportions for FY11 and FY10 were 45% and
29%, respectively). In comparison, retail, SME and services sector
credit have been relatively slower so far. We look at the subsector
trends within each of these sectors in detail below.
Looking at the subsectors within industry category – and assuming a
16.5% credit growth target for the subsectors for FY12F – subsectors
such as power, roads, iron & steel and engineering are well placed in
terms of proportion of the annual target completed. Using this metric,
the ‘roads’ subsector comes out as a clear topper, which is in
accordance with some of the guidance given by banks and NBFCs a
few quarters back (that order activity in the roads sector is expected to
pick up). Textiles, food processing and telecom are clearly lagging so
far, but seasonal priority sector lending effect could come into play for
textiles and food processing.
Within retail loans – vehicle loans have tracked better so far than
mortgage loans, while non-collateralized loans are clearly much
slower. Mortgages have completed only 46% of the proposed annual
FY12F target so far, compared with 59% in FY11 and 57% in FY10.
In the services sector – commercial real estate has been the biggest
laggard. Major subsectors such as NBFC and Transport Operators are
lagging so far this year due to regulatory uncertainty surrounding their
priority sector status and ban on mining operations in certain parts of
the country.
In priority sector lending – While manufacturing SMEs are on track,
service-driven SMEs are clearly lagging behind. While decline in agri
credit could get reversed on the back of strong Rabi harvest and fourth
quarter push, small ticket mortgage book could be a laggard.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sector-wise analysis of credit growth
As of the last available sector level data released by the RBI
(November 18, 2011), aggregate non-food credit growth was 16.8% yy
with primary contributions from industry (20.9% y-y), services (16.9%
y-y), retail (13.4% y-y) and agriculture (7.3% y-y). We expect credit
growth to average 16.5% for FY12.
Working with 16.5% credit growth for the sector for FY12F, we have
examined what proportion of this total credit target for FY12F has been
completed so far by each of the major sectors and then compared it
with the proportionate completion over the same period in FY11 and
FY10. Looking at Figure 1, credit growth for the industry has
completed 59% of the annual target so far in FY12, compared with
51% in FY11 and 38% in FY10. When adjusted for loans given to the
power sector, industry has clocked 53% of the annual FY12 credit
target (comparable proportions for FY11 and FY10 were 45% and
29%, respectively). In comparison, retail, SME and services sector
credit have been relatively slower so far. We look at the subsector
trends within each of these sectors in detail below.
Looking at the subsectors within industry category – and assuming a
16.5% credit growth target for the subsectors for FY12F – subsectors
such as power, roads, iron & steel and engineering are well placed in
terms of proportion of the annual target completed. Using this metric,
the ‘roads’ subsector comes out as a clear topper, which is in
accordance with some of the guidance given by banks and NBFCs a
few quarters back (that order activity in the roads sector is expected to
pick up). Textiles, food processing and telecom are clearly lagging so
far, but seasonal priority sector lending effect could come into play for
textiles and food processing.
Within retail loans – vehicle loans have tracked better so far than
mortgage loans, while non-collateralized loans are clearly much
slower. Mortgages have completed only 46% of the proposed annual
FY12F target so far, compared with 59% in FY11 and 57% in FY10.
In the services sector – commercial real estate has been the biggest
laggard. Major subsectors such as NBFC and Transport Operators are
lagging so far this year due to regulatory uncertainty surrounding their
priority sector status and ban on mining operations in certain parts of
the country.
In priority sector lending – While manufacturing SMEs are on track,
service-driven SMEs are clearly lagging behind. While decline in agri
credit could get reversed on the back of strong Rabi harvest and fourth
quarter push, small ticket mortgage book could be a laggard.
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