For Quick Alerts
For Daily Alerts

Loan growth of India to fall to 15-yr low in FY14: BofA-ML

By Religare
Loan growth of India to fall to 15-yr low in FY14: BofA-ML
Bank of America-Merrill Lynch (BofA-ML) has said that the loan growth of India would fall to 13 per cent in the current fiscal, a 15-year low.

In a report, BofA-ML said, "We are bearish on FY14 loan growth and expect that it to fall to less than 13 per cent, a 15-year-low."

Even this tepid growth will be driven by working capital loans and not corporate loans, which will grow by up to 15 per cent, it said, adding the same stream also contributed to the FY'13 growth coming at 15.5 per cent, which is above estimates.

Corporate loan demand is likely to fall to 11 per cent in FY14 as against the just-ended fiscal's 16 per cent; the report said and noted that fresh approvals in the recent past are down by up to 70 per cent on a year-on-year basis.

For the current fiscal, key segments driving the loan growth will be retail products like mortgages, personal loans and cards, and thus private lenders will fare better than the public sector ones, it maintained.

For private sector banks, loan growth will come in the 16-22 per cent range "as they gain market share, leverage on expanded distribution and maintain their dominance in sectors seeing better growth like mortgages, personal loans and parts of working capital," BofA-ML said. The country's largest lender, State Bank, is the only government-run bank which may deliver a surprise, it said.

According to the report, mortgage loan growth will come in at up to 20 per cent "given the changing demographics and the sensitivity of mortgage to rate cuts and possible time value correction in property prices."

On the positive side, the low loan growth may prompt banks to aggressively cut deposit and lending rates, it added.

Read more about: loans
Company Search
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more