SME, retail could drive double-digit credit growth for some banks, says BNP Paribas
Santanu Chakrabarti from BNP Paribas noted key banking trends from recent business updates. He highlighted that credit growth remains strong, particularly in SME and retail sectors, with limited industrial credit growth. Many banks could achieve high teens to 20% credit growth for the year. Chakrabarti advised caution when investing in PSU banks.
Santanu Chakrabarti of BNP Paribas believes many banks could achieve credit growth ranging from high teens to 20% for the year.
In an interview with CNBC-TV18, Chakrabarti highlighted some noteworthy trends from the recent business updates of various banks.
Credit growth remains robust, he said, highlighting the alignment between banks' detailed growth data and the broader systemic data. He emphasised that SME and retail sectors are driving growth while significant industrial credit expansion is on the horizon.
“Firstly, credit growth is definitely not slowing down. What is very interesting is the growth granularity that has been provided by the banks is also squaring with the data that was available at the system level, which is essentially that some of the SME and retail segments seem to be leading the growth and large-scale industrial credit pickup is still some time away,” he said.
Despite the fact that term deposit rates haven't seen substantial increases in the past three to four months, they continue to demonstrate resilience.
He noted that deposit growth is gradually approaching credit growth, as expected in this downstream trend.
However, CASA growth continues to stay at low levels.
“We are now at a part of the cycle where the legacy term deposit portfolio given that most term deposit portfolios are 2-3 years of average duration is not that much of a price differential from what the incremental rates are coming in at,” he said.
Regarding net interest margins (NIMs), he anticipates no major dramatic shifts.
“For most, we have penciled in something like 5-10 basis points (bps) for the quarter and about 10-15 bps for the full year, which is not very dramatic,” he said.
He suggests that investors exercise caution when making purchases within the public sector undertaking (PSU) banks.
For more details, watch accompanying video
(Edited by : Shweta Mungre)
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
Telangana CM violated poll code, defer Rythu Bharosa payment, says Election Commission
May 7, 2024 9:01 PM
Lok Sabha Election 2024: How Indian political parties are leveraging AI
May 7, 2024 6:59 PM