Federal Bank and HDFC Bank, the country’s largest private sector lender, reported quarterly results last week. Analysts see the major figures as favourable, notably in terms of credit growth and asset quality improvement. Let’s look at some significant numbers to gain a sense of scale.
Total advances at HDFC Bank as of September 30 2022, were Rs 14.4 lakh crore, a 23.4 per cent increase over the previous year. Domestic retail loans increased by 21.4 per cent, commercial and rural banking loans increased by 31.3 per cent, and corporate and other wholesale loans increased by 27 per cent. Overseas advances accounted for 3.1 per cent of overall advances.
Total advances grew 19.4 per cent to Rs 1.64 lakh crore as of September 30, 2022 in the case of Federal. In a conference call, the bank described it as the strongest quarter to date, with extremely solid growth across all major metrics. The improvement in asset quality was also noticeable. Gross non-performing assets (NPAs) at HDFC Bank were 1.23 per cent of gross loans on September 30, 2022, compared to 1.35 per cent on September 30, 2021.
On September 30, 2022, net non-performing assets were 0.33 per cent of net loans. Federal Bank‘s gross NPAs were 2.46 per cent, down from 2.69 per cent the previous quarter. If these figures are any indication, the overall health of the banking industry in the July-September quarter will be solid. However, it is too early to judge because other major bank reports are due in the coming days.
The hazards posed by a lengthy delay in economic recovery and rapidly rising interest rates are plainly seen in the industry. The repo rate, the central bank’s primary lending rate at which short-term funds are supplied to banks, has risen by roughly two percentage points during the current rate hike cycle.