Your money: Loan growth showing signs of moderation

Loan growth for the industry has declined to 12% in 1QFY20 compared to 15% last quarter due to deceleration in retail demand, slowdown in auto loans and two-wheelers has led to slightly moderated growth trends 1QFY20.

Loan growth for the private sector under coverage was strong at 17% y-o-y, higher than industry average but lower than that witnessed over past few quarters. Loan growth of PSU banks under coverage (excluding BOB) was broadly in line with last quarter at 11% y-o-y.

Loan growth was at 13% year-on-year (y-o-y) for banks under coverage (excluding BOB), lower than 15% witnessed in past few quarters. Loan growth was driven by growth in retail loans while corporate loans started to show signs of revival, albeit at a muted pace.

Corporate loan showing reversal in trends
Corporate loan growth has started to show a reversal. There is negligible improvement in capex across most companies. There are, however, select sectors where signs of recovery and increase in investment are visible (renewable, infrastructure, etc.). The quantum, though, remains considerably low. Additionally, most banks are focused on lending to better rated corporate segment.

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