Indian banks' loan growth likely to slow over easing WPI, tight foreign funding - Jefferies

Aavas Financiers

15/03/2023 07:41

** Brokerage Jefferies says it expects Indian banks' credit
growth to slow to 13%-14% this summer, from 15.5% as of Feb. 24
    ** Cites moderating wholesale inflation, bond yields and
tight foreign funding 
    ** Fall of wholesale price-based inflation rate (WPI)
 INWPI=ECI  from 17% in May 2022 to 4% in Feb this year "may
reflect in lower working capital demand from May-July 2023" -
Jefferies
    ** Brokerage believes stable global rates and steady rupee
may turn Indian corporates to external commercial borrowings "in
some time"
        ** Jefferies expects gap between banks' deposit and
credit growth to narrow, which could allay investor concerns on
tighter liquidity level and may offer scope for banks to trim
peak term deposit rates
    ** "We recommend investors re-adjust weight away from banks
to NBFCs"; top picks Bajaj Finance Ltd  BJFN.NS , Cholamandalam
Investment and Finance Company Ltd  CHLA.NS  and Aavas
Financiers Ltd  AVAS.NS  - note 
    ** Shares of BJFN and CHLA up 0.92% and 1.98% at 1:05 p.m.
IST on Wednesday while AVAS down 0.14%
    ** Nifty Bank Index  .NSEBANK  down 0.13% as of 1:05 p.m.
IST on Wednesday 

 (Reporting by Hritam Mukherjee in Bengaluru)
 ((Hritam.Mukherjee@thomsonreuters.com;))