Only SME, mortgage, real estate, construction and roads sectors reported meaningful growth in October 2013, reports Nomura Equity Research based on RBI released sector-wise monthly loan data
As of October 2013, aggregate non-food credit growth was 17% y-y (year-on-year), with primary contributions from power (25.9% y-y), SMEs (small and medium enterprises 25.8% y-y), NBFC loans (non-banking finance companies loans 22.1% y-y) and mortgages (19.3% y-y). Loan growth for the industry sector ex power was 12.1% y-y. Annualized YTD (year-to-date) non-food credit growth was 12.7%, with four sectors (mortgage, power, NBFC and service SMEs) accounting for 53% of this growth. Month-on-month (m-m), SME, mortgage, real estate, construction and roads sectors have reported meaningful growth. These trends have been analysed by Nomura Equity Research in its Quick Note on RBI released sector-wise monthly loan data for October 2013.
Within SMEs, service sector SMEs continue to show very strong loan growth of 28% y-y, while manufacturing SME loans picked up this month to report 23.6% y-y growth. Agri loans were up 8% annualized YTD, much better than the usual seasonal trend of reporting a decline over this period, says the Quick Note from Nomura.
With loans to NBFCs coming off m-m, the big growth driver within the services segment was retail trade growing at 29.5% y-y. Loans to transport operators picked up a bit to 8% y-y. Services ex-SME growth was at 19.6%. Commercial real estate loans increased sharply in October 2013 to report 21.1% y-y growth, points out Nomura.
Since July 2013, the RBI’s move on hiking the MSF (Marginal Standing Facility) had driven a shift in corporate borrowing from the bond market to bank loans, but this trend has seen some reversal into October 2013, particularly for NBFCs and petrochemical sectors, where the loans outstanding dropped Rs260 billion m-m after having gone up by Rs685 billion from July to September 2013, says Nomura.
The Nomura analysis for the bank loan and deposit growth trends is given below:
The trend for priority sector lending is shown in the chart below:
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