Latest news with #CurrentAccountSavingsAccount
India Gazette
2 days ago
- Business
- India Gazette
Indian Banking Sector to see moderate credit growth amid profitability pressure: BCG Report
ANI 11 Jun 2025, 16:49 GMT+10 New Delhi [India], June 11 (ANI): The Indian banking and financial services industry (BFSI) is currently experiencing a dynamic period characterised by moderate credit growth expectations alongside evolving profitability pressures, according to a report by Boston Consulting Group (BCG). The report further adds that, while certain segments, such as mutual funds and insurance, demonstrate robust upward trajectories, the overall credit growth for the year has seen a slowdown, even as deposit growth remains profitability within the banking sector is facing headwinds. Net Interest Margins (NIMs) are projected to be under pressure as repo-linked loans reprice due to rate cuts, compelling banks to lower deposit rates. However, an elevated Credit-Deposit (CD) ratio intensifies competition for low-cost deposits, further limiting banks' ability to reduce rates and impacting profitability, particularly for mid-sized banks and Small Finance Banks (SFBs). While the banking industry overall reported a 16 per cent year-on-year growth in Net Profit, this masks varied performances. Furthermore, Public Sector Undertaking (PSU) banks have shown a strong upward trend with a 26 per cent (YoY) PAT growth, outperforming private banks which posted an 8 per cent (YoY) PAT growth. However, SFBs have experienced a sharp decline in profitability due to rising credit costs. Banks have seen an improvement in credit costs, declining from 0.6 per cent to 0.4 per cent, while NBFCs faced an increase from 1.3 per cent to 1.7 per report also highlights that, the broader BFSI landscape presents a mixed picture. Mutual fund Assets Under Management (AUM) reached an all-time high, demonstrating an impressive 18 per cent year-on-year growth. The insurance sector also showed positive momentum, with premiums rising by 7 per cent year-on-year in March 2025. This upward trajectory in MF and insurance premiums signifies continued investor interest and market penetration in these terms of deposits, growth has remained steady, with overall deposits increasing by 11 per cent year-on-year in FY25, reaching Rs229.3 Lakh Crore. Aggregate deposits grew by 12 per cent year-on-year. However, CASA (Current Account Savings Account) growth has remained muted, indicating a shift in the composition of deposits. Simultaneously, as highlighted earlier, credit growth has slowed down this year, with total net advances growing by 12 per cent year-on-year, and aggregate credit growing by 13 per cent, year-on-year. (ANI)
Economic Times
06-06-2025
- Business
- Economic Times
Bajaj Finance shares rise 6% post RBI outcome. Why NBFC stocks will benefit more than bank stocks
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Shares of India's largest NBFC, Bajaj Finance on Friday jumped nearly 6% to hit the day's high of Rs 9,434 on the NSE after the Reserve Bank of India (RBI) reduced the repo rate by 50 bps. The move is expected to benefit the NBFC more than the of the reasons behind the likelihood of superior gains for NBFCs versus banks is the nature of their borrowing. Banks primarily rely on deposits (Current Account Savings Account - CASA, and term deposits) for their funding requirement, and CASA deposits are low-cost and relatively sticky. Moreover, term deposit rates also adjust, albeit with a lag. The transmission of rate cuts to deposit rates is often slower than to market borrowing rates, meaning banks don't see the full benefit of lower funding costs as quickly as NBFCs NBFCs rely heavily on market borrowings via bonds, commercial papers and bank loans for their funding. The rates on these market instruments tend to react more swiftly to changes in policy rates. When interest rates fall, NBFCs can raise funds at lower costs more expert Sandip Sabharwal sees NBFCs benefitting more than the banks, concurring to the view. "...you rightly said that NBFCs tend to benefit much more in a rate cut cycle because banks have CASA deposits which are more or less fixed rates which can vary maybe a little bit here or there, but NBFCs tend to be more bulk borrowers and with lot of NBFCs having loans which are fixed rate, so a rate cut cycle typically would benefit NBFCs much more, so directionally some NBFCs like the high quality ones would outperform banks, but overall for banks also it is not bad at all," he RBI Governor, Sanjay Malhotra, today announced a 50 bps cut in the policy rate, bringing it to 5.50%. So far, the RBI has slashed the repo rate by 100 bps in three successive monetary rate cut is expected to increase the demand for loans though their margins may remain under pressure in the near-to-medium term.'The big rate cut will impact bank margins in the near term. However, the credit growth that this rate cut will hopefully stimulate will compensate for the dip in margins,' said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Governor Malhotra's Rs 2.5 lakh crore helpline of a 100 bps cut in the Cash Reserve Ratio (CRR) has turned the tide for RBI's move to reduce CRR starting September 6, 2025, is expected to inject Rs 2.5 lakh crore into the banking system. Analysts say this will significantly improve system liquidity and offset the NIM squeeze caused by falling lending rates.'This move is likely to enhance liquidity in the system, making borrowing cheaper and encouraging companies to pursue capital expenditure,' said Divam Sharma, Founder of Green Portfolio PMS. 'With FPI inflows slowing down, this infusion of liquidity is a timely and welcome move.'
Time of India
06-06-2025
- Business
- Time of India
Bajaj Finance shares rise 6% post RBI outcome. Why NBFC stocks will benefit more than bank stocks
Shares of India's largest NBFC, Bajaj Finance on Friday jumped nearly 6% to hit the day's high of Rs 9,434 on the NSE after the Reserve Bank of India (RBI) reduced the repo rate by 50 bps. The move is expected to benefit the NBFC more than the banks. One of the reasons behind the likelihood of superior gains for NBFCs versus banks is the nature of their borrowing. Banks primarily rely on deposits (Current Account Savings Account - CASA, and term deposits) for their funding requirement, and CASA deposits are low-cost and relatively sticky. Moreover, term deposit rates also adjust, albeit with a lag. The transmission of rate cuts to deposit rates is often slower than to market borrowing rates, meaning banks don't see the full benefit of lower funding costs as quickly as NBFCs might. Meanwhile, NBFCs rely heavily on market borrowings via bonds, commercial papers and bank loans for their funding. The rates on these market instruments tend to react more swiftly to changes in policy rates. When interest rates fall, NBFCs can raise funds at lower costs more immediately. Market expert Sandip Sabharwal sees NBFCs benefitting more than the banks, concurring to the view. "...you rightly said that NBFCs tend to benefit much more in a rate cut cycle because banks have CASA deposits which are more or less fixed rates which can vary maybe a little bit here or there, but NBFCs tend to be more bulk borrowers and with lot of NBFCs having loans which are fixed rate, so a rate cut cycle typically would benefit NBFCs much more, so directionally some NBFCs like the high quality ones would outperform banks, but overall for banks also it is not bad at all," he said. The RBI Governor, Sanjay Malhotra, today announced a 50 bps cut in the policy rate, bringing it to 5.50%. So far, the RBI has slashed the repo rate by 100 bps in three successive monetary policies. Read More: Bank, NBFC stocks cheer RBI's 50 bps bonanza, but are rate cuts delivering? The rate cut is expected to increase the demand for loans though their margins may remain under pressure in the near-to-medium term. 'The big rate cut will impact bank margins in the near term. However, the credit growth that this rate cut will hopefully stimulate will compensate for the dip in margins,' said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments. But Governor Malhotra's Rs 2.5 lakh crore helpline of a 100 bps cut in the Cash Reserve Ratio (CRR) has turned the tide for lenders. The RBI's move to reduce CRR starting September 6, 2025, is expected to inject Rs 2.5 lakh crore into the banking system. Analysts say this will significantly improve system liquidity and offset the NIM squeeze caused by falling lending rates. 'This move is likely to enhance liquidity in the system, making borrowing cheaper and encouraging companies to pursue capital expenditure,' said Divam Sharma, Founder of Green Portfolio PMS. 'With FPI inflows slowing down, this infusion of liquidity is a timely and welcome move.' ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
Mint
30-04-2025
- Business
- Mint
Stock to buy for short term: Axis Securities recommends buying SBI shares on Akshaya Tritiya for up to 15% upside
Stock to buy for short term: SBI share price declined over 3% on Wednesday amid heavy selling pressure. SBI shares fell as much as 3.36% to ₹ 784.45 apiece on the BSE. Despite the decline, brokerage firm Axis Securities has identified SBI shares as a strong short-term investment opportunity, projecting an upside potential of up to 15% over the next one to three months. Axis Securities has selected State Bank of India (SBI), the largest public sector lender in the country, as its 'Techno-Funda Pick', highlighting that the stock is well-positioned for gains based on both technical indicators and strong fundamental support. According to Axis Securities, SBI remains well-placed to sustain its growth momentum, supported by a comfortable Loan-to-Deposit Ratio (LDR) that enables the bank to accelerate credit growth, particularly in the retail and SME segments. This also offers scope to support Net Interest Margins (NIMs). The brokerage believes SBI can maintain a sustainable Return on Assets (RoA) of around 1% over the medium term. This outlook is backed by strong growth prospects across business segments, a robust deposit franchise with a focus on CASA (Current Account Savings Account) deposits, increasing fee-based income, and disciplined cost and provision management. On the technical front, SBI share price recently broke above the neckline of an Inverted Head and Shoulders pattern at ₹ 787 on the daily chart in mid-April 2025. The breakout was supported by a strong bullish candle and rising volumes, confirming investor participation and bullish sentiment. Following a brief throwback to the breakout level, SBI share price rebounded sharply, validating the strength of the breakout. SBI shares are currently trading above key short- and medium-term moving averages (20, 50, 100, and 200-day SMAs), indicating sustained bullish momentum, Axis Securities noted. The daily Relative Strength Index (RSI) has also given a positive crossover and continues to trend above its upward sloping trendline, reinforcing the positive price action. Axis Securities recommends buying SBI shares in the range of ₹ 815 - 799, while maintaining a stop loss at ₹ 775. The brokerage firm anticipates that SBI shares could move toward the recent swing highs, with a potential price target in the range of ₹ 885 to ₹ 930 — implying an upside of nearly 15% from Tuesday's closing price. The expected investment horizon for this target is 1 to 3 months. SBI share price has delivered mixed returns across different timeframes. Over the past three months, SBI shares have gained 4%. However, the stock has declined over 3% in the last six months and is down around 4% on a one-year basis. Despite this short-term underperformance, SBI share price has delivered strong long-term returns. The stock has rallied 37% over the past two years and has generated multibagger returns of 315% over a five-year period. At 11:40 AM, SBI share price was trading 2.49% lower at ₹ 791.55 apiece on the BSE. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions. First Published: 30 Apr 2025, 11:41 AM IST
Times of Oman
06-02-2025
- Business
- Times of Oman
SBI reports 84% jump in net profit, strong credit growth and improved asset quality
New Delhi: The State Bank of India (SBI) has reported a significant 84.32 per cent year-on-year (YoY) growth in net profit, reaching Rs16,891 crore in Q3FY25. This strong performance was driven by higher operating profit and improved asset quality. According to SBI, the operating profit for the quarter stood at Rs23,551 crore, marking a 15.81 per cent YoY increase. Additionally, the Net Interest Income (NII) grew by 4.09 per cent YoY to Rs41,446 crore, while the Return on Assets (ROA) improved to 1.04 per cent, rising 42 basis points (bps) YoY. The bank's Net Interest Margin (NIM) for the domestic business stood at 3.15 per cent in Q3FY25. The bank also witnessed robust credit growth, with total advances crossing Rs40 lakh crore. Credit growth stood at 13.49 per cent YoY, with domestic advances growing by 14.06 per cent YoY, while foreign office advances increased by 10.35 per cent YoY. Segment-wise, SME lending surged by 18.71 per cent YoY, followed by agriculture loans at 15.31 per cent YoY. Corporate advances rose 14.86 per cent YoY, while retail personal advances registered a growth of 11.65 per cent YoY. On the deposit front, the total deposits grew by 9.81 per cent YoY, with the Current Account Savings Account (CASA) ratio at 39.20 per cent as of December 31, 2024. The bank has also demonstrated improved asset quality, with the Gross NPA ratio reducing to 2.07 per cent, an improvement of 35 bps YoY. The Net NPA ratio improved by 11 bps YoY to 0.53 per cent, indicating better risk management and recoveries. The Provision Coverage Ratio (PCR) rose to 74.66 per cent, marking an improvement of 49 bps YoY. Moreover, the slippage ratio for Q3FY25 improved by 19 bps YoY to 0.39 per cent, further strengthening the bank's financial stability. On the capital front, the Capital Adequacy Ratio (CAR) stood at 13.03 per cent at the end of Q3FY25, ensuring a strong capital position. The bank continues to expand its digital presence, with 64 per cent of new savings accounts opened digitally through YONO. Additionally, the share of transactions through alternate banking channels increased to 98.1 per cent in 9MFY25, compared to 97.7 per cent in 9MFY24. Overall, the bank's strong profitability, improved asset quality, and growing digital banking presence reflect its resilient growth trajectory.
