Low Credit Cost, Interest rates aid Private Banks in Q2 2022

Quarterly results of all major banks for Q2 2022-23 were reported and we can observe that
most banks achieved double-digit growth in their portfolios. The net profit figures of these
banks soared in this quarter, on the back of higher net interest income (NII) and good pace
in loan growth.
Increased rates of interest to depositors, following by raising of the repo rate by the Reserve
Bank of India (RBI) by 190 basis points, translated into an impressive growth in Net in the
margins of these banks.
All major Private Banks except Yes Bank lessened their provisions for NPAs as Asset quality
improved significantly as both gross non-performing assets (NPAs) and net NPAs declined
year on year during the period under review.
As per the experts opinion banks will get aggressive in the days ahead to raise their deposits
and garner durable liquidity to fund the rising credit demand in the economy.
Director and head, financial institutions, India Ratings and Research, Prakash Agrawal said
that “Credit costs were expected to be low, as corporate asset quality had largely played out
and challenges on MSME and Retail were manageable. The challenges from the Covid
pandemic also didn't cause as much damage as feared”
From Quarterly results we have observed that Credit costs for some banks in India are in low
double-digits and banks are making contingent provisions in order to avoid showing
abnormal growth in profits
Concerning factor in Banking Industry

Now major concern for the banking sector is lagging deposit growth According to Reserve
Bank of India (RBI) data, credit growth touched a decadal high of 18 per cent in the fortnight
ended October 7 but deposits grew at a much slower pace of 9.6 per cent. Majority of the
banks those announced their quarterly results, have reported high loan growth but their
deposit growth was seen trailing the loan growth by a large margin, except for HDFC Bank
and IDFC First Bank.

SURESH MAHANTI
RCCU – HYD

Source -Business Standard