As such, the agency expects the sector’s performance to remain polarized in 2023. In its Global Banking Outlook-2023 report, the agency further said that the banking sector as a whole will see stronger balance sheets and higher demand, which should boost bank credit. There will be development, but deposit growth will lag behind.
private banks outnumber public banks
Data shows that in terms of credit and deposit growth, private banks outpaced public sector banks (PSBs) in the first quarter of the current financial year. Private sector banks gained 120 bps market share from PSBs on a year-on-year basis to reach 36.8% as it witnessed higher retail loan growth and an aggressive credit market capture.
In terms of credit growth performance, private banks outperformed by a huge margin of 650 bps in Q1. The deposit market share of PSBs declined by 144 bps year-on-year in the first quarter, while that of private banks increased by 115 bps.
CareEdge said, “Private banks are steadily gaining market share due to aggressive customer acquisition and better services offered.”
“In terms of credit and deposit growth, private banks outperformed PSBs by a wide margin in Q1FY23, which continued to be driven by aggressive customer acquisition and offer of higher interest rates on deposits (especially on savings accounts) is expected,” it said.
Credit growth of private banks grew by 18% compared to 9.6% a year ago, due to increased focus on the retail loan market. At the same time, PSBs saw a growth of around 11.5% as compared to 3.1% in the year-ago period, driven by retail loans, inflation-induced working capital requirement, MSMEs driven by ECLGS, and lower interest rates.
The growth witnessed by private sector banks was the highest in the last nine quarters and almost reached pre-pandemic levels.