Pvt banks report healthy deposit accretions, sluggish advances growth in Q3

Small and mid-sized private sector banks have reported a healthy deposit growth in the third quarter, even as they have struggled to grow their loan books, as per exchange filings by three lenders.

Despite interest rates being the lowest in over a decade, the pandemic and the resultant economic impact has ensured that loan demand is very low and the system's credit growth is stuttering at about 6 per cent.

Expending income on deposits which do not fetch income through lending is a cost on banks.

Microlender-turned-universal bank Bandhan Bank was the only one which showed a surge in loan book, which grew 23 per cent on an annual basis to Rs 80,255 crore, while in case of IndusInd Bank and IDFC First Bank, the growth has been marginal, separate exchange filings showed.

IndusInd Bank had seen a shrinking of the loan book in the nine months to September. It increased the loan book by over Rs 6,000 crore during the December quarter to end slightly above the year-ago period's Rs 2.07 lakh crore, while IDFC First Bank's book grew by over Rs 3,000 crore during the quarter ended December 2020.

However, from a deposits perspective -- it was a dip in deposits during the Yes Bank crisis which led banks to disclose the performance ahead of the quarterly results -- there has been growth across the three lenders.

Bandhan Bank reported a 30 per cent increase in deposits compared to the year-ago period, IDFC First Bank's deposits grew 41 per cent and IndusInd Bank witnessed 11 per cent growth during the quarter.

The share of the low cost current and savings account (CASA) deposits as on December 31, 2020 for IndusInd Bank was at 40.5 per cent, almost at par with the year-ago period, while Bandhan Bank witnessed a healthy rise of 43 per cent.

IDFC First Bank said its retail deposits (including both CASA and term deposits) registered a growth of 100 per cent on a year-on-year basis.

The IDFC First Bank scrip gained 4.16 per cent, Bandhan Bank corrected by 1.46 per cent and IndusInd Bank ended the session almost flat on the BSE on Wednesday, as against a 0.54 per cent dip in the benchmark.