Bank credit increased at a slower rate by 14.4% in February on a year-on-year basis against an increase of 15.4% in February 2012. However, Nomura’s Equity Research states, “If we assume the same quantum of loan growth for March 2013 as was achieved during the same month last year, then we are likely to see a non-food credit growth of 13.8% for FY13F.”
Bank credit increased on a slower rate by 14.4% in February on a year-on-year (y-o-y) basis against an increase of 15.4% in February 2012, according to Reserve Bank of India (RBI) data on sectoral deployment of bank credit that was released yesterday.
Credit to industry increased by 14.7% y-o-y in February compared with the increase of 19.1% in February 2012. Credit to the agricultural sector grew by 18.2% y-o-y and retail by16.2% y-o-y. As per the RBI's weekly statistical supplement, non-food credit as of 8 March 2013 was 15.3% y-o-y.
Within retail, mortgages recorded a 17.7% y-o-y growth, credit cards 23.7%, vehicle loans 20.9% and personal loans 19.9% were the key growth areas, Nomura Equity Research in its Quick Note points out. However, consumer durable loans declined 6.7% y-o-y.
In February 2013 and within retail loans, vehicle loans had the highest y-o-y growth at 20.9%, followed closely by non-collateralized loans at 20.4% and mortgages at 17.7%. Mortgage loans have clearly picked up pace in February, the brokerage said.
Nomura Equity Research further adds that key growth drivers within the industry segment have been mining, power, iron & steel, chemicals, engineering, cement and roads. Within the industry sector, y-o-y growth for key sub-sectors was 30% for power, 20% for iron & steel, 17% for engineering, 18% for roads, and 22% for chemicals. Loans to the telecom sector were flat y-o-y.
Loans to SMEs gathered pace in February on a sequential basis, growing at 6.3% y-o-y in February compared with 4.6% in January.
In the services segment, loans to the retail trade had the highest y-o-y growth at 26% followed by loans to NBFCs (non-banking financial companies) at 17%. Bank loans to NBFCs continue to decline. In fact trade loans are the only category within services which has recorded increasing y-o-y growth rates over the last two years.
In conclusion, Nomura’s Equity Research states, “If we assume the same quantum of loan growth for March 2013 as was achieved during the same month last year, then we are likely to see a non-food credit growth of 13.8% for FY13F.”
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