Back to normal! Five banks report 3-5% loan growth post second Covid wave

The growth in the loan book of banks is slowly limping back to normal as the economy has started to open up with no big signs of a third wave of COVID-19.

Five private sector banks have released their loans and advances numbers for the second quarter (July-September) of 2021-22. While the first quarter of the current year was a wash out because of the second wave, the September quarter showed some hope and optimism for the bankers.

The country's second-largest bank, HDFC Bank, witnessed a 4.4 per cent sequential growth in its loans and advances. The outstanding advances stood at Rs 11,98,500 crore in September quarter as against Rs 11,47,700 crore in the June quarter of the current year. The bank's wholesale book, however, grew by less than 1 per cent. The highest growth came from rural and commercial segments.

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The beleaguered Yes Bank, which is now being managed by a SBI-led consortium, showed the highest sequential growth of 5.7 per cent in its loan and advances. The new generation private sector bank, neck-deep in NPAs in the corporate segment, is gradually scaling up its retail book.

Hinduja-owned IndusInd Bank witnessed over 5 per cent loan growth at Rs 2,21,821 crore.

Meanwhile, Federal Bank and IDFC First Bank, both headquartered in south India, recorded over 3 per cent growth in their advances. Federal Bank saw its gross advances improving to Rs 1,37,309 crore in September quarter from Rs 1,32,787 crore in June quarter.

According to experts, the loan growth for banks mostly came from retail assets, especially mortgages, cards, and personal loans.

The outlook for the third and fourth quarter looks encouraging because of the festival season and pent-up demand. The low interest rates, with banks offering home loans at 6 per cent plus rates, are creating some momentum in the market. However, some banks are still cautious with unsecured loans as NPAs are also rising in the category.

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