Deposit growth outpaced credit growth in the July-September quarter, based on provisional business numbers released by the first set of banks, easing pressure on their credit-deposit (CD) ratios even as the share of low-cost current and savings account (CASA) deposits came under pressure.
Loan growth remained strong, with most banks reporting high-teens growth in advances, but deposits grew faster during the quarter. As a result, CD ratios declined from June-end levels at all four banks that provided comparable quarterly data.
Yes Bank reported the fastest year-on-year loan growth among the five lenders, with advances rising 23.8% to Rs 3.10 lakh crore. Bank of India followed with 20.4% growth in global gross advances to Rs 8.54 lakh crore, while Bank of Baroda's global advances rose 18.3% to Rs 15.12 lakh crore. IDBI Bank's net advances grew 18% to Rs 2.72 lakh crore and Bandhan Bank's loans, including pass-through certificates (PTCs), increased 13.1% to Rs 1.58 lakh crore.
The quarter-on-quarter numbers, however, showed a clear shift towards deposit mobilisation. At Bank of India, global deposits rose 8.3% during the quarter, compared with 7.1% growth in advances. At IDBI Bank, deposits grew 9.2%, almost twice the 4.9% increase in advances.
This faster deposit growth brought down CD ratios, although most banks remained above their year-ago levels.
Bandhan Bank, which has the highest CD ratio among the banks in the group, saw the ratio ease to about 91.7% from 94.3% at the end of June. Deposits rose 4.7% during the quarter, against 1.8% growth in loans. The ratio stood at 88.6% a year earlier.
Yes Bank's CD ratio declined to 87.5% from 90.4% in June, although it remained higher than 84.5% a year earlier. Adjusting for foreign currency loans extended through its GIFT City branch, the bank's CD ratio was 83.2%.
Bank of India's global CD ratio fell to about 82.3% from 83.3% in June and 83.1% a year earlier. Its domestic CD ratio declined more sharply to 78.1% from 81.8% a year ago, as domestic deposits grew 23.3%, faster than the 17.7% increase in domestic advances.
IDBI Bank's net advances-to-deposits ratio fell to 76.4% from 79.5% in June, broadly in line with 75.9% a year earlier.
Bank of Baroda, which compared its September figures with March-end rather than June-end, reported a global CD ratio of about 86.4%, down from 86.7% in March but higher than 85.3% a year earlier. Its domestic CD ratio fell to 79.8% from 82.3% a year ago, with domestic deposits growing 17% against 13.5% growth in advances. Overseas lending accounted for much of the bank's 18.3% global loan growth, while domestic retail advances grew 18.7%.
CASA share shrinks
While deposits grew faster than loans, the composition of those deposits remained a concern. CASA deposits, which are generally cheaper for banks than term deposits, grew more slowly than total deposits at all three banks that disclosed the numbers.
Bandhan Bank's CASA deposits fell 4.8% quarter-on-quarter to Rs 46,131 crore, bringing the CASA ratio down to 26.71% from 29.40% in June and 27.97% a year earlier. CASA deposits grew only 4.3% year-on-year, while retail term deposits rose 16.8%. Bulk deposits increased 10% during the quarter and now account for 37.31% of term deposits, up from 36.88% in June.
At Yes Bank, the CASA ratio declined to 30% from 32.7% in June and 33.7% a year earlier. CASA deposits grew 6.6% year-on-year, well below the 19.5% growth in total deposits. Excluding FCNR(B) deposits raised under the RBI's swap facility, the CASA ratio stood at 31.7%. The bank's certificates of deposit nearly doubled during the quarter to Rs 11,382 crore from Rs 6,604 crore, compared with Rs 987 crore a year earlier.
IDBI Bank had the highest CASA ratio among the three, but even there the share declined to about 43.8% from 45.8% a year earlier. It was marginally higher than the 43.6% recorded in June. CASA deposits grew 12% year-on-year, against 17% growth in total deposits.
Bank of India and Bank of Baroda did not disclose CASA figures in their provisional business updates.
