德意志银行 德意志银行研究所
3Q17 results – Demonetization aggravates problems, retail banks undeterredIndian banks have completed releasing their 3QFY17 earnings. These wereimpacted on two fronts by the demonetization exercise – material slowdown oflending growth and strong increase in CASA deposits .Yet again, retail-focusedbanks emerged stronger than the large corporate and business lending banksdue to more sustainable NIM and asset quality. Banks such as Union Bank ofIndia recorded the largest qoq NIM decline of ~30bp driven by lower thenpeers CASA ratio of 36.8% and a mere 1% loan growth in 3Q17 vs. 2Q17. SBI,ICICI and HDFC Bank recorded visibly lower 2bp, 1bp and 10bp NIM squeezerespectively on the back of robust CASA levels, proactive deposit ratesreduction by up to 150bp and relatively stronger loan growth in retail segment.
As the loan book clean-up led to a large rise in reported NPLs during 2Q17 to7.7% from 5.4% at the end of 5.4%, they increased further to 8.1% (see tablebelow). In our view, the full impact on the economy and the banking systemfrom the demonetization it yet to be recognized and should become morequantifiable by Jun-17, in our view.
3Q17 results – Demonetization aggravates problems, retail banks undeterredIndian banks have completed releasing their 3QFY17 earnings. These wereimpacted on two fronts by the demonetization exercise – material slowdown oflending growth and strong increase in CASA deposits .Yet again, retail-focusedbanks emerged stronger than the large corporate and business lending banksdue to more sustainable NIM and asset quality. Banks such as Union Bank ofIndia recorded the largest qoq NIM decline of ~30bp driven by lower thenpeers CASA ratio of 36.8% and a mere 1% loan growth in 3Q17 vs. 2Q17. SBI,ICICI and HDFC Bank recorded visibly lower 2bp, 1bp and 10bp NIM squeezerespectively on the back of robust CASA levels, proactive deposit ratesreduction by up to 150bp and relatively stronger loan growth in retail segment.
As the loan book clean-up led to a large rise in reported NPLs during 2Q17 to7.7% from 5.4% at the end of 5.4%, they increased further to 8.1% (see tablebelow). In our view, the full impact on the economy and the banking systemfrom the demonetization it yet to be recognized and should become morequantifiable by Jun-17, in our view.
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