Oct. 19, 2009 (The Hindu Business Line) --
Priya Nair
Mumbai, Oct. 19 The growth in corporate credit has been higher than that in retail credit, judging by the second quarter results announced by some private banks.
This trend is likely to continue in the remaining quarters, as companies go ahead with their capex plans and as banks continue to approach retail lending cautiously, said bankers and analysts.
Ms Aditi Thapliyal, Lead Analyst of research firm Noble Group (OOTC:NOBGY) , said banks, especially those with large retail base, have been going slow in the segment after the liquidity crisis. Though several banks are indicating that they would like to grow in retail mortgages, they need more comfort in credit quality. So corporate credit would see higher growth than retail, she said.
HDFC Bank, whose credit increased by 8 per cent in the September-ended quarter, saw growth in secured retail loans such as auto loans and mortgages.
“We do see a pick-up in retail loans, but corporate loans have grown faster. For some time corporate loans will continue to grow faster. The momentum in retail will sustain, but wholesale will see stronger momentum,” said Mr Paresh Sukthankar, Executive Director, HDFC Bank. (NYSE:HDB)
For Axis Bank, the share of retail advances came down from 24 per cent of total advances as on September 2008 to 22 per cent of total advances as on September 2009. One of the reasons for the flat 7 per cent growth in retail credit this year was the bank’s selective stance on unsecured lending, said Mr Somnath Sengupta, Executive Director and CFO, Axis Bank.
According to an analyst with a securities firm, banks are more cautious when it comes to lending to the retail segment. “Corporate lending is safer although yields are lower. Going ahead, corporates will continue to have a bigger role with their capex plans,” he said.
IndusInd Bank saw a marginal fall in retail credit, which was mainly due to the slowdown in the commercial vehicle and three-wheeler loan segment, said Mr S.V. Zaregaonkar, Executive Vice-President and Chief Financial Officer.
“We have a high share of commercial vehicle and three vehicle loans. There has been a slowdown in this segment due to the overall slowdown in the economy. We are totally absent in mortgage and personal loans segment. Going ahead capital expansion financing will be on the upper trajectory as corporates are showing commitment towards their expansion plans,” he said.
