What lies under the hood in banks' Q3 business updates
Subscribe to enjoy similar stories. Initial updates from banks for the December quarter reveal a mixed performance, with private and public sector lenders charting distinct paths in loans and deposit growth. So far, 13 banks— six private sector and seven public sector lenders—have reported their third quarter business updates.
These reports highlight a divergence in growth strategies, with private lenders prioritizing deposit mobilization while public banks focus on loan expansion. State-owned banks showcased relative stability in their credit-deposit (CD) ratios, reflecting their emphasis on loan expansion. While the entire banking system has struggled with a deposit crunch for much of the last two years, deposit growth is typically easier for state-owned banks given their larger presence across the country, comfort of government backing and customer loyalty, allowing them to be better placed compared to their private peers in terms of the deposit base.
Read this | PSU banks are giving the best FD rates in eight years. Here's why In contrast, private sector banks, which have been aggressively chasing deposits for several quarters, reported an uptick in deposit growth, a development crucial for addressing their elevated CD ratios. Despite Q3 traditionally being a period of high loan growth due to accelerated festival spending, the quarter saw some moderation in loan growth.
System-wide credit growth slowed to an estimated 11% in Q3, compared with 13% in the previous quarter. Read this | The collateral damage in RBI’s crackdown on loan frenzy, KYC India’s largest private lender, HDFC Bank, reported its slowest loan growth in recent years, with advances rising just 3% year-over-year and 0.9% sequentially. This was
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