Banking - Growth Concerns Remain; Receding Corporate Pain Aids Asset Quality, Profitability: Dolat Capital
A customer writes on a cheque deposit slip at a bank branch in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Banking - Growth Concerns Remain; Receding Corporate Pain Aids Asset Quality, Profitability: Dolat Capital

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Dolat Capital Report

Deposit growth continues to outpace credit growth by a wide margin, aiding system liquidity.

Deposit growth has remained ~4% higher than credit growth for almost a year now and this has pushed down the credit-deposit ratio by over 4.5% to its lowest in a decade (excluding of demonetisation period).

This excess liquidity is being parked with the Reserve Bank of India under the reverse-repo window earning just above 3% close to the savings deposit rate for banks.

It is this negative spread that was expected to spur credit growth. However, weak demand and risk aversion has limited growth thus far.

Benign liquidity environment has supported lower short-term interest rates, which remain close to historic lows.

Click on the attachment to read the full report:

Dolat Capital Banking Report.pdf

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