Pvt banks see muted Q3, challenges ahead

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₹10,270 crore at the end of December quarter, higher than market estimates. Vaidyanathan also expressed confidence of seeing an improvement in the share of current and savings accounts or Casa in its overall deposits. The Casa deposit share fell to 38% in Q3 compared with 42% in the June quarter, and 44% in the December 2022 quarter.

Mobilising low-cost Casa accounts has turned out to be a challenge for most banks in the third quarter. Kotak Mahindra Bank’s Casa ratio dipped to 47.7% at the end of the December quarter, from 48.3% in the previous quarter and 53.3% a year earlier. The bank’s new CEO Ashok Vaswani emphasized that private sector lender’s primary challenge will be business expansion.

ICICI Bank’s Casa stood at 39.6% at the end of December compared with 40.8% in the previous quarter and 45.3% a year ago. “Despite a moderation in interest margin, the growth in loan book coupled with benign credit costs continue to drive healthy earning for the banks," said Anil Gupta, senior VP, Icra rating agency. “While earnings growth may moderate in coming quarters driven by slowing credit growth amid challenges in deposit mobilization, the earnings outlook for the banks is still expected to remain healthy." Provisions for most banks jumped in the third quarter as most private sector banks, barring IndusInd Bank, made one-off provisions on their investments in alternative investment funds (AIFs).