Banks Business Growing At Decent Pace
DSIJ Intelligence / 19 Oct 2012
Banks are witnessing decent business (deposit and advance) growth. This could be made out from the recent RBI's fortnightly release of report on Scheduled Banks Statement of Positions. If we look at Scheduled Commercial Banks (SCBs) Deposits on an aggregate increased by 13.88 per cent to Rs 64110 crore while the loan grew by 15.89 per cent to Rs 48093 crore on YoY basis for the fortnight ending on 5th October 2012. The growth is slightly lower than RBI forecast of 15 (deposit) and 17 (credit) per cent respectively for FY2013.
If we look at Deposits, Demand deposit (Current and Saving account deposit) grew by 5.57 per cent to Rs 6102 crore while the Time deposit (Fixed deposit) grew by 14.83 per cent to Rs 58007 crores. One of the reason for the muted demand deposit growth is because of high Inflation, were people are not able to save more and the expenditure ratio against their income is high.
On the flip side, Time deposit is witnessing decent growth after most of the banks are offering attractive rate of Interest on Fixed deposits. We further believe RBI will maintain Status Quo in its next Monetary meet which is scheduled on 30th October 2012 and banks would probably maintain more or less the current rates for deposits schemes. Having said that banks have started softening the rates on the Home loans segment which is also beneficiary for the customers.
We at Dalal Street Investment Journal, were among the first one to say that the “Worst is almost over for the banking space” and we continue to believe the same. For the September quarter of 2012, banks would post good performance, however they would face some headwinds on their asset quality front. One has to be very selective while investing in the banking space, as they should watch out for Asset quality, Net Interest Margin (NIM), business and bottom line growth of the banks. Our top picks continue to be HDFC bank, ICICI bank, J&K bank, Yes bank etc. Nevertheless we would keep updating the results of most of the banks.
If we look at Deposits, Demand deposit (Current and Saving account deposit) grew by 5.57 per cent to Rs 6102 crore while the Time deposit (Fixed deposit) grew by 14.83 per cent to Rs 58007 crores. One of the reason for the muted demand deposit growth is because of high Inflation, were people are not able to save more and the expenditure ratio against their income is high.
On the flip side, Time deposit is witnessing decent growth after most of the banks are offering attractive rate of Interest on Fixed deposits. We further believe RBI will maintain Status Quo in its next Monetary meet which is scheduled on 30th October 2012 and banks would probably maintain more or less the current rates for deposits schemes. Having said that banks have started softening the rates on the Home loans segment which is also beneficiary for the customers.
We at Dalal Street Investment Journal, were among the first one to say that the “Worst is almost over for the banking space” and we continue to believe the same. For the September quarter of 2012, banks would post good performance, however they would face some headwinds on their asset quality front. One has to be very selective while investing in the banking space, as they should watch out for Asset quality, Net Interest Margin (NIM), business and bottom line growth of the banks. Our top picks continue to be HDFC bank, ICICI bank, J&K bank, Yes bank etc. Nevertheless we would keep updating the results of most of the banks.
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