Corporate loan growth set to make a comeback in 2024: Bernstein's Pranav Gundlapalle

Pranav Gundlapalle, a Senior Analyst specialising in India financials at Bernstein, on Friday, January 5, said that corporate loan growth is set to make a comeback in 2024. In an exclusive interaction with CNBC-TV18, he hinted at a departure from a consumer-centric growth model towards a renewed focus on corporate credit.

Gundlapalle highlighted the prolonged period where consumer-driven growth dominated the banking sector. However, he underscored emerging indicators pointing towards an imminent revival in corporate credit.

"This could be the single biggest differentiator amongst banks this year," he expressed, emphasising the impact this shift might wield within the sector.

The senior analyst highlighted the selective nature of corporate credit growth, predicting that a few large banks may capture a disproportionate share of the market.

Gundlapalle predicted a consequential differentiation in growth dynamics, foreseeing a split between larger banks and their smaller counterparts.

He attributed this to the potential limitations posed by deposits, stating that banks with stronger deposit franchises, as indicated by an improved Current Account Savings Account (CASA) ratio, would likely experience accelerated growth.

The discussion extended to the attractiveness of certain financial entities, with Gundlapalle singling out NBFCs like Bajaj Finance as potentially beneficial entities amidst anticipated rate cuts.

"Especially the ones with fixed-rate loan books will stand to benefit," he said.

Additionally, Gundlapalle pointed towards banks like IndusInd Bank, positioned to capitalise on reduced funding costs while maintaining a robust asset side, as potential beneficiaries in this evolving financial landscape.