Banking Sector Update : February sectoral credit deployment: Bank credit up 15.9% YoY, 0.9% MoM, 13.3% FY23-TD By ICICI Securities

Banks’ sector deployment data for Feb’23 suggests overall non-food credit now stands at Rs134.15trn, up 15.9% YoY / 0.9% MoM / 13.3% FY23-TD, with growth driven by NBFCs, trade, housing and other retail loans.

Key trends are as follows:
1) Growth trend
across verticals:
* 20.7% YoY, 1.3% MoM, in services
* 20.4% YoY, 1.4% MoM, in retail
* 14.9% YoY, 1.1% MoM, in agri

2) 45% of the incremental net lending for the month was seen in retail vertical nfollowed by 38% in services, 15% in agri, and the balance 2% in industry.

3) Non-food credit growth YoY is now above 15% for the sixth consecutive month. For non-food credit growth to end above 15% for full-year FY23, ~1.5% MoM growth would be required for the month of Mar’23.

4) Among services, lending to NBFCs was up 1.7% MoM and that to other serviceswas flat MoM. Both these segments together account for ~57% of total loans in the services vertical. As a result, credit to services was up 1.3% MoM.
   Furthermore, under other services, retail trade rose up 3.1% MoM and wholesale trade 2.1% MoM.

5) Other services (which includes MFs, banking & finance companies other than NBFCs and MFs, and other services) segment was flat MoM, but up 17.6% YoY and 11.5% YTD.

6) Housing constituted 19% of incremental net lending for the month and 41% of incremental net retail lending. As a result, housing book was up 1.2% MoM, 15.0% YoY and 13.4% YoY, thereby gradually catching up with overall non-     food credit growth.

7) Other retail loans were up 2.5% MoM and 22.9% YTD, which is a key reason for the rapid growth in loans in the overall retail vertical. It constituted 22% of overall incremental net lending for the month and 48% of retail incremental net      lending.
8) Credit card book, after 3.8% MoM rise in Dec’22 and 3.7% MoM in Jan’23, was flat for Feb’23 but is still up 25.9% YTD.

9) In the industry vertical, micro/small industry was up 1.5% MoM, large industry was down 0.2% MoM and medium industry down 0.1% MoM.

10) Within large industry, petroleum and road loans saw MoM decline, while cement and sugar industries saw MoM uptick.


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