BANKING and FINANCIAL SERVICES
The financial services industry recorded a 3.27% drop in income from operations in Q1FY22,. This was the first time the industry has seen a drop in revenue since the March 2002 quarter. Despite a 6.1% increase in bank credit, revenue dropped. The drop in income was due to lower interest rates. Banks, on the other hand, improved their operational as well as net profitability, with net earnings more than tripling in the Q1FY21 compared to the Q1FY20.
The banking industry's operating performance is estimated to be modest in Q2FY22, with credit offtake remaining low in the 6-7% range. However, earnings are projected to rise due to a reduction in incremental slippages, which will be aided by improved collections. On the operational front, there is likely to be some variance across lenders, with major banks expected to do better than their medium and smaller counterparts. Lenders are anticipated to guide asset quality improvement and credit offtake growth in the coming months. According to RBI (Reserve Bank of India statistics), In June 2021, bank credit grew by 6.0% YoY (6.4% a year ago): bank branches in urban, semi-urban, and rural areas had double-digit credit growth, while it slowed to 2.7% for metropolitan branches (5.1% a year ago).
Private sector bank credit growth, YoY, was significantly greater (10.1%) than that of public sector banks (3.1%). In June 2021, aggregate deposit growth, YoY, was 10.0% (11.5% a year ago): deposit growth in private sector banks outpaced that of public sector banks.
In June 2021, the%age of CASA (Current Account and Savings Account) deposits in total deposits grew to 43.8% (up from 42.0% a year earlier). The all-India C-D (credit-deposit) ratio decreased to 70.5% in June 2021 (73.1% a year ago) as deposit growth outpaced credit growth. C-D ratios declined for all bank categories, except regional rural banks.