Starting the new financial year (FY27) on a strong footing, the public sector registered a double-digit growth in advances in the first quarter of the financial year; however, the deposit mobilisation trailed as compared to the surge in loans, which could be a concern. While low-cost CASA deposits remained under pressure, retail lending remained the main engine of growth.
Provisional trading disclosures from nine of the 12 state-owned lenders showed loan growth ranging from about 12 per cent to about 29 per cent year-on-year. In contrast, deposit growth ranged from 3.5 per cent to 16 per cent, according to a report in news agency PTI, which indicates that debt demand remains strong despite the slowdown in liability growth.
Bank Of Baroda Reports Strong Growth
Among the major lenders, Bank of Baroda reported a 17.4 per cent year-on-year rise in global advances against a 13.8 per cent increase in deposits, while Bank of India posted 18.64 per cent loan growth and a 14.92 per cent rise in deposits.
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While deposit volume grew by 8.5 per cent, Punjab National Bank's advances grew by 12.85 per cent year-on-year.
Canara Bank recorded 18 per cent growth in loans and 11.7 per cent in deposits, while Indian Bank recorded 13.9 per cent growth in loans and 13.3 per cent in deposits.
Central Bank of India was the fastest-growing lender in the group, with deposits growing 11.7 per cent, while advances increased 28.8 per cent year-on-year.
UCO Bank reported 21.3 per cent growth in advances and 11 per cent in deposits, while Punjab & Sind Bank reported 19.5 per cent growth in loans and 12.2 per cent in deposits.
Union Bank of India's deposit collection remained weak, growing only 3.5 per cent year-on-year, while advances grew 12.5 per cent.
RAM Boosts Credit Growth
Retail, agriculture, and MSME (RAM) loans helped boost credit among lenders.
Among other banks, Canara Bank showed the highest growth, with domestic RAM growth rising 21.3 per cent year-on-year, followed by Bank of India (19.7 per cent) and Bank of Baroda (18.5 per cent). Indian Bank's RAM portfolio grew 14.8 per cent, while Union Bank's grew 11.56 per cent.
Credit Deposit Also See Improvement
Loan-to-deposit ratios for many lenders increased further due to lending growth faster than deposit growth. Punjab National Bank's global credit-to-deposit ratio improved to 73.92 per cent from 71.1 per cent last year, while UCO Bank's ratio increased from 75.38 per cent to 82.15 per cent.
Union Bank's domestic loan-to-deposit ratio also increased sharply to over 83.38 per cent.
Meanwhile, pressure on low-cost deposits continued. Union Bank's CASA ratio declined slightly to 35.10 per cent from 35.51 per cent a year ago, while Central Bank of India's CASA ratio fell to 46.61 per cent from 46.88 per cent.
Indian Bank's domestic CASA ratio also fell to 39.64 per cent from 39.67 per cent at the end of March.
With Inputs from PTI