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Banking sector posts 16.2% growth in credit offtake in Q1

August 25, 2023

Banking sector posts 16.2% growth in credit offtake in Q1
The banking sector during the first quarter of FY24 showed growth of 16.2 per cent in credit offtake while the outlook for FY24 remained positive, driven by economic expansion, increased capital expenditure, the implementation of the PLI scheme, and a push for retail credit, said a CareEdge report. It added that this growth would be coming off a high base in FY23, which might have a marginal impact on the growth rate. 

During Q1FY24, NII of public sector and private sector banks, CareEdge said, grew by 26.7 per cent and 26.3 per cent on-year respectively. “The growth was driven by robust loan growth and higher yields on advances; however, it was partially offset by a rise in the cost of deposits,” it said. NII of Scheduled Commercial Banks (SCBs) grew by 26.5 per cent year-on-year to ₹1.84 lakh crore in Q1FY24 due to healthy loan growth and a higher yield on advances over the year-ago period.
 
The NIM of SCBs witnessed on-year improvement of 36 basis points, reaching 3.27 per cent in Q1FY24. “This enhancement can be attributed to the faster repricing of loans, whereas deposit rates have not yet reflected the increased interest rates,” CareEdge report said. Besides, SCBs witnessed higher-than-expected deposit growth in the quarter. The anticipated rise in deposit costs, which is expected to be a lag effect, is likely to put continued pressure on NIM in Q2FY24. 
 
Interest expenses of SCBs rose by 41.8 per cent YoY in Q1FY24, wherein private banks grew by 46.6 per cent and public sector banks by 39.1 per cent in the same period.
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