Bank credit growth has been moderate in recent months. Medium scale businesses saw the highest credit growth at an average of 3.7% month-over-month from October to March 2011. Non-banking financial companies and transport operators also experienced high credit deployment over the last 6 months. Going forward, banks may become more cautious about lending to micro and small businesses due to interest rate hike risks. Overall, the document suggests that while credit growth has been steady, moderation in the pace of lending may be prudent given rising interest rates.

1. Bank’s Credit growth – Time for moderation !!
Analyst – Abhisek Sasmal
033-3051-2175
asasmal@microsec.in Microsec Research reports are also available on Bloomberg <MCLI>
Source: SEBI, Microsec Research
24th May’ 2011 Microsec Research Research
Microsec

2. Banking Credit
Sector wise deployment of credit (Month-on-Month):
If we see sectoral deployment of credit, March always remains the month when Bank’s Priority Sector loan (PSL) shows strong growth.
April-May-June (AMJ) quarter remained seasonally very weak. Credit off take again started picking up pace from Oct-Nov-Dec (OND)
quarter. In the l rate hik cycle, the O
h last hike l h OND quarter was an exception, credit d l
i di deployment grew only b 0 % month on month b i If
l by 0.55% h h basis. f
we see the monthly credit growth, then it is higher for Industry (MSME, Large) segment followed by Services Industry. Among the
Industries, it is Medium scale business houses which showed highest average growth of 3.7% month on month (from Oct to March 2011).
It was closely followed by Large Industries ( 2.3% average MoM). Banks were not very gung ho about the Micro & Small segment as these
segments were vulnerable to interest rate hikes. Among Services, it was NBFCs & transport operators which had the highest deployment
of credit in the last 6 months. Computer software & shipping showed very muted MoM average growth in credit off take.
Growth rates % (MoM) Mar 11
Mar-11 Feb 11
Feb-11 Jan 11
Jan-11 Dec 10
Dec-10 Nov 10
Nov-10 Oct 10
Oct-10 Sep 10
Sep-10 Aug 10
Aug-10 Jul 10
Jul-10 Jun 10
Jun-10 May 10
May-10 Apr 10
Apr-10 Mar 10
Mar-10 Feb 10
Feb-10 Jan 10
Jan-10 Dec 09
Dec-09 Nov 09
Nov-09 Oct 09
Oct-09 Sep 09
Sep-09
Agriculture & Allied Activities 5.02% 0.05% 3.99% 2.31% 1.33% 1.11% 1.66% -0.25% -1.45% 0.68% -1.20% -2.83% 12.35% 2.71% 3.60% 1.47% 1.62% 0.21% 2.14%
Industry (Micro & Small, Medium
2.62% 2.58% 2.56% 2.45% 2.50% 0.89% 2.13% 0.12% 1.39% 4.44% 0.68% -0.88% 5.03% 2.55% 3.33% 2.14% 0.74% 0.52% 3.88%
and Large)
Services 4.77% 1.53% 2.38% 3.05% 2.31% 2.58% 2.32% -0.03% 1.28% 1.93% 0.23% -0.58% 4.99% 0.94% 3.63% 1.02% 1.44% -0.88% 3.03%
Personal Loans 1.98% 1.75% 2.89% 1.05% 1.54% 1.70% 1.04% 0.56% 2.13% 0.66% 0.89% -0.32% 1.28% 1.34% 0.78% 0.32% 1.01% -1.35% 0.32%
Priority Sector 4.33% 2.98% 0.13% 1.83% 1.18% 1.34% 5.86% -1.11% 0.21% 0.22% -1.79% -0.66% 8.79% 2.19% 4.48% -0.95% 0.21% 0.69% 1.33%
Growth rates % (MoM) Mar-11 Feb-11 Jan-11 Dec-10 Nov-10 Oct-10 Sep-10 Aug-10 Jul-10 Jun-10 May-10 Apr-10 Mar-10 Feb-10 Jan-10 Dec-09 Nov-09 Oct-09 Sep-09
Industry (Micro & Small, Medium
2.62% 2.58% 2.56% 2.45% 2.50% 0.89% 2.13% 0.12% 1.39% 4.44% 0.68% -0.88% 5.03% 2.55% 3.33% 2.14% 0.74% 0.52% 3.88%
and Large)
- Sub Sectors
Micro & Small 4.22% 1.15% -1.63% 2.46% 1.24% -0.35% 1.01% 0.47% 0.88% 1.14% -0.43% 0.45% 2.73% 2.81% 1.76% 3.59% 0.33% -0.23% 1.09%
Medium 9.38% 1.94% 4.18% 3.71% 1.90% 1.08% 0.41% 0.43% 3.88% 5.26% 0.50% 1.22% 3.73% 3.52% 1.66% 0.01% -2.13% -4.75% 0.83%
Large 1.36% 2.94% 3.16% 2.27% 2.83% 1.11% 2.62% 0.01% 1.15% 5.03% 0.94% -1.45% 5.71% 2.36% 3.91% 2.13% 1.26% 1.52% 5.04%
Growth rates % (MoM) Mar-11 Feb-11 Jan-11 Dec-10 Nov-10 Oct-10 Sep-10 Aug-10 Jul-10 Jun-10 May-10 Apr-10 Mar-10 Feb-10 Jan-10 Dec-09 Nov-09 Oct-09 Sep-09
Services 4.77% 1.53% 2.38% 3.05% 2.31% 2.58% 2.32% -0.03% 1.28% 1.93% 0.23% -0.58% 4.99% 0.94% 3.63% 1.02% 1.44% -0.88% 3.03%
- Sub Sectors
Transport Operators 12.27% 1.06% 1.04% 1.40% 0.20% 4.31% 1.41% -1.68% 3.17% 0.39% -0.70% 0.05% 6.52% 6.53% 2.01% 3.39% 0.66% 11.28% -0.19%
Computer Software 5.81% -3.62% -2.75% 2.40% -2.25% -0.56% 9.35% 0.81% 9.19% -6.80% 2.75% 5.70% -0.44% 8.47% 9.49% -1.12% 6.56% -2.78% 11.51%
Tourism, Hotels & Restaurants -2.30% 0.82% 4.43% 1.83% 2.15% 6.45% 6.28% 2.85% 1.95% 2.73% 5.77% 3.57% 5.38% 4.63% 5.56% 6.45% 1.35% 1.60% 2.64%
Shipping -3.81% 0.86% 10.37% 2.68% 0.34% -7.91% -3.51% -0.31% 3.49% 1.11% 0.38% -2.79% -2.94% -1.07% 0.87% 1.69% -0.91% -3.78% 3.52%
Professional Services 2.86% 1.22% 2.85% -0.40% 1.06% 4.77% 3.83% -0.61% 3.03% 1.30% 4.52% 9.22% 1.04% -0.76% 2.36% 5.41% -16.45% 4.30% -0.76%
Trade 1.63% 0.17% 3.45% 1.12% 1.24% 1.27% 1.24% 0.35% 1.06% 3.22% -0.93% -1.22% -0.32% 1.21% 3.21% 1.22% 1.75% -0.56% 4.75%
Commercial Real Estate 3.66% 1.89% 0.43% -0.05% 1.49% 2.23% 2.64% -0.21% 7.85% -3.80% 1.81% 1.99% 0.57% 3.70% 0.89% -1.15% 0.21% -6.15% -2.60%
Non-Banking Financial Companies
10.61% 3.10% 7.75% 6.25% 2.61% 4.29% 11.52% 1.24% -5.00% 5.51% -0.59% -1.53% 4.62% -0.57% 5.97% 0.16% -1.10% -2.03% 4.70%
(NBFCs)
Other Services 3.57% 2.01% -0.78% 5.57% 4.67% 2.03% -2.52% -0.68% 0.56% 2.71% -0.57% -3.39% 12.96% -1.29% 4.28% 0.50% 8.28% -1.66% 5.09%
Color scheme to indicate major sectors Source: RBI, Microsec Research
24th May’ 2011 Microsec Research

3. Growth rates % (MoM) Mar-11 Feb-11 Jan-11 Dec-10 Nov-10 Oct-10 Sep-10 Aug-10 Jul-10 Jun-10 May-10 Apr-10 Mar-10 Feb-10 Jan-10 Dec-09 Nov-09 Oct-09 Sep-09
Personal Loans 1.98% 1.75% 2.89% 1.05% 1.54% 1.70% 1.04% 0.56% 2.13% 0.66% 0.89% -0.32% 1.28% 1.34% 0.78% 0.32% 1.01% -1.35% 0.32%
- Sub Sectors
Consumer Durables 1.33% 5.79% 4.82% 1.23% 1.37% -3.04% -0.65% 1.42% 8.03% 2.53% -4.75% 3.01% 2.38% 1.00% 1.75% -1.81% 0.39% -0.97% 3.10%
Housing (Including Priority Sector
1.11%
1 11% 1.46%
1 46% 1.46%
1 46% 1.57%
1 57% 0.81%
0 81% 2.40%
2 40% 0.41%
0 41% 0.76%
0 76% 2.16%
2 16% 0.49%
0 49% 1.38%
1 38% 0.08%
0 08% 1.25%
1 25% 1.41%
1 41% -0.20%
0 20% 0.65%
0 65% 1.02%
1 02% 0.54%
0 54% 0.89%
0 89%
Housing)
Advances against Fixed Deposits 6.26% 2.64% 1.14% 2.34% 5.56% -1.14% 4.77% 0.97% 0.03% 3.23% -2.45% -0.91% 4.56% 2.12% 2.03% -0.36% 1.56% -2.37% 1.02%
Advances to Individuals against
1.03% 6.43% 18.10% -3.07% 4.71% 9.02% 6.15% -7.59% -2.24% -5.83% 4.13% -4.51% 2.36% 7.58% 3.59% 6.99% -0.93% 3.86% 2.24%
share, bonds, etc.
Credit Card Outstanding -2.69% -0.69% 2.91% -3.76% 2.33% -0.17% -2.91% 2.45% -3.34% -1.67% -2.16% -0.66% -2.86% -2.39% -3.18% -3.05% -4.18% -2.57% -2.58%
Education -0.21% 0.33% 2.03% 0.89% 1.29% 2.27% 1.19% 2.27% 4.70% 2.23% 0.11% 0.16% 0.93% 1.12% 3.14% 1.74% 1.84% 1.99% 3.54%
Vehicle Loans 0.53% 1.27% 3.54% 2.09% 2.24% 2.44% 1.60% 1.35% 2.02% 2.65% 0.91% 1.37% 3.55% 1.01% 2.84% 1.04% 2.07% -5.16% 0.86%
Other Personal Loans 5.03% 2.97% 7.55% -0.88% 1.26% 0.85% 1.49% -1.62% 2.83% -1.37% 2.29% -2.45% -0.59% 1.72% 1.78% -0.46% 1.18% -4.79% -2.31%
Growth rates % (MoM) Mar-11 Feb-11 Jan-11 Dec-10 Nov-10 Oct-10 Sep-10 Aug-10 Jul-10 Jun-10 May-10 Apr-10 Mar-10 Feb-10 Jan-10 Dec-09 Nov-09 Oct-09 Sep-09
Priority Sector 4.33% 2.98% 0.13% 1.83% 1.18% 1.34% 5.86% -1.11% 0.21% 0.22% -1.79% -0.66% 8.79% 2.19% 4.48% -0.95% 0.21% 0.69% 1.33%
- Sub Sectors
Agriculture & Allied Activities 5.02% 0.05% 3.99% 2.31% 1.33% 1.11% 1.66% -0.25% -1.45% 0.68% -1.20% -2.83% 12.35% 2.71% 3.60% 1.47% 1.62% 0.21% 2.14%
Micro & Small Enterprises 9.25% 1.17% -1.20% 2.16% 1.08% 2.26% 1.93% 0.76% 2.06% 0.35% -0.74% 1.17% 4.07% 2.77% 1.49% 2.59% -0.26% 1.91% 3.18%
Housing 1.85% 0.30% -3.12% 0.65% 1.45% 1.66% -0.26% 0.59% 1.59% -0.48% 0.91% 0.68% 1.94% 0.33% 0.39% -0.10% 1.68% 1.28% -0.35%
Micro-Credit 7.33% -0.08% -15.87% 5.29% -0.20% 21.07% -8.77% 6.58% 6.97% 3.97% -1.91% 1.31% 6.40% 1.17% 6.96% 1.25% -0.71% 2.06% 2.88%
Education Loans 0.79% 0.48% 2.61% 1.43% 0.89% 0.59% 1.53% 1.76% 0.41% 7.10% -0.65% 0.51% 0.92% 0.86% 3.17% 2.54% -0.89% 3.95% 3.84%
State-Sponsored Orgs. for SC/ST 0.29% -0.54% -22.09% 3.74% 0.63% 1.53% -1.15% 4.05% 26.88% -10.06% 1.97% -24.45% 1.07% 0.15% -0.07% 16.90% -0.09% 3.84% -7.55%
Weaker Sections 6.51% 0.17% 0.75% 0.54% 1.76% 0.21% 1.82% -0.17% 2.57% -0.69% -0.09% 1.28% 7.89% 4.32% 4.21% 3.56% 0.13% 3.02% 1.34%
Export Credit -0.18% -1.57% 2.50% 7.71% -2.24% -9.23% 0.51% 3.01% 2.46% -0.44% 10.55% -1.91% 0.79% 23.32% 4.71% 2.31% 0.69% -1.85% 6.35%
Color scheme to indicate major sectors Source: RBI, Microsec Research
Among personal loans, Vehicle loans & consumer durables showed good growth. Education remained seasonally weak in the last 6
months. C di card O/S showed d
h Credit d h d de-growth of 0 34% MoM. A
h f 0.34% Among priority sectors, agriculture & micro- credit showed strong
i i i l i di h d
growth, however export credit was down MoM.
Conclusion:
Keeping in mind the learning from the last rate hike cycle, banks already started to reduce exposure to some what riskier sectors & sub-
sectors. The global economic situation isn’t stable and may not improve in a hurry. This was reflected in bank’s credit off take growth for
computer services (mainly for letter of credit as these companies are cash rich) & export sectors After RBI’s recent regulation on PSL
sectors. RBI s
loans we may see some moderation in credit growth towards NBFCs. Probablely credit demand slowdown in consumer vehicle sector is
already visible.
24th May’ 2011 Microsec Research Research
Microsec

4. Industry wise deployment of credit (Month-on-Month):
As far as Industries are concerned, Infrastructure showed consistent growth, followed by basic metals, mining & food
processing (After govt thrust in the budget proposals). However, cement, petroleum and chemical showed very tepid growth.
Banks learnt from their previous mistakes where over exposure to petroleum companies during FY09 cost them dearly.
Growth rates % (MoM) Mar-11 Feb-11 Jan-11 Dec-10 Nov-10 Oct-10 Sep-10 Aug-10 Jul-10 Jun-10 May-10 Apr-10 Mar-10 Feb-10 Jan-10 Dec-09 Nov-09 Oct-09 Sep-09
Infrastructure 3.12% 2.21% 2.78% 0.82% 2.13% 0.54% 3.17% 2.15% 4.94% 7.08% 1.51% 2.84% 3.90% 2.46% 5.02% 1.64% 2.16% 2.69% 5.12%
Construction 2.21% 6.45% 3.14% 2.69% 1.62% 0.36% -4.38% -4.26% 5.28% 0.88% 0.60% -1.37% 7.09% 5.15% -3.82% 9.24% 1.04% -2.43% 1.31%
Gems & Jewellery 3.39% 2.43% 2.54% 1.64% 1.23% 3.90% -0.16% 2.82% 1.35% 3.13% -1.96% 1.68% 4.43% 1.75% -0.35% -1.63% 7.38% -7.02% 4.78%
Vehicles, Vehicle Parts &
7.52% -1.85% -1.41% 2.04% 2.10% 0.33% 5.89% 3.79% 0.43% -1.27% -0.44% -2.76% 2.80% 0.39% 0.63% 3.81% 0.73% -2.05% 1.70%
Transport Equipment
All Engineering 2.52% 1.80% 0.39% 3.04% 2.32% 1.71% 5.79% -0.10% 3.63% 2.64% 2.17% -2.12% 3.05% 4.40% 1.86% 2.90% 0.54% 0.32% 5.10%
Basic Metal & Metal Product 2.75% 3.62% 2.10% 4.26% 3.43% 1.57% 3.12% -0.87% 1.05% 3.67% -0.13% 1.18% 2.73% 2.31% 3.25% 1.93% -0.81% 2.17% 3.80%
Cement & Cement Products -8.85% 2.87% 1.56% 0.83% 2.02% 2.14% 3.47% 3.16% -2.72% 4.90% 1.07% 4.97% 5.74% 3.27% 6.64% 0.48% -1.45% -3.68% 4.17%
Rubber, Plastic & their Products 5.75% 1.41% 3.94% 3.11% 0.59% 2.96% 3.18% 1.12% 3.81% 2.62% 1.30% 4.74% 4.29% 1.57% 4.40% 2.00% -0.09% -1.88% 4.65%
Chemicals & Chemical Products 2.57% 1.56% -3.09% 1.88% 4.05% -0.01% 4.93% 1.03% -0.90% 5.30% -3.42% -3.52% 7.76% 1.37% 2.49% -0.10% 0.19% -0.19% 4.56%
Mining & Quarrying (incl. Coal) 6.34% 8.65% -4.85% 5.16% 0.91% 2.46% -1.86% 2.42% 0.18% 4.10% -1.99% 2.91% 6.58% 3.09% 3.54% 2.14% 4.04% -2.02% 3.69%
Food Processing 4.11% 3.94% 6.24% 5.71% 3.61% -1.03% -0.24% -1.17% -0.28% 2.03% 3.01% 0.42% 8.57% 2.39% 6.18% 3.73% 0.12% -0.97% 1.82%
Beverage & Tobacco 2.64% 3.54% 3.21% 4.85% 0.43% 1.10% 1.85% -0.42% 3.70% -5.61% -3.89% -1.21% 0.72% -1.39% 7.52% -4.42% 8.47% -2.85% 3.50%
Textiles 2.31% 3.19% 5.22% 2.23% 1.84% 1.12% 1.32% -0.40% 0.98% 0.67% -0.68% 0.08% 3.81% 1.99% 2.94% 3.17% 1.34% 0.29% 0.18%
Paper & Paper Products 3.73% 1.15% -0.55% 0.83% -0.33% 0.97% 2.29% -2.82% -0.16% 2.99% 0.51% 1.90% 2.43% 2.18% 1.83% 3.55% -6.58% 14.30% 2.45%
Petroleum, Coal Products &
-6.83% 0.73% 5.96% -0.20% 3.01% -1.23% -0.92% -7.51% -10.43% 10.28% -0.68% -19.18% 19.74% 2.05% 3.54% -8.69% 0.82% -4.63% 17.36%
Nuclear Fuels
Growth rates % (MoM) Mar-11 Feb-11 Jan-11 Dec-10 Nov-10 Oct-10 Sep-10 Aug-10 Jul-10 Jun-10 May-10 Apr-10 Mar-10 Feb-10 Jan-10 Dec-09 Nov-09 Oct-09 Sep-09
Infrastructure 3.12% 2.21% 2.78% 0.82% 2.13% 0.54% 3.17% 2.15% 4.94% 7.08% 1.51% 2.84% 3.90% 2.46% 5.02% 1.64% 2.16% 2.69% 5.12%
- Sub Industry
Power 3.81% 2.06% 3.29% 2.35% 3.30% 2.26% 3.59% 1.65% 3.35% 3.51% 2.76% 4.64% 2.45% 2.30% 7.94% 2.34% 2.20% 2.47% 4.76%
Telecommunications 2.65% 1.64% 1.54% -2.96% 0.45% -2.88% 4.99% 4.33% 13.18% 27.04% 1.43% 5.64% 6.22% 2.99% 3.13% 2.99% -0.28% -0.41% 13.75%
Roads 3.11% 2.95% 3.30% 2.50% 1.45% 3.40% -2.88% 3.25% 1.14% 3.46% 1.09% 0.60% 7.56% 2.14% 2.04% 0.24% -0.10% 7.08% -0.09%
Other Infrastructure 1.08% 2.66% 1.94% -1.39% 1.21% -3.77% 6.94% -0.82% 4.27% 2.13% -2.16% -2.93% 1.95% 2.88% 1.58% 0.00% 7.33% 1.24% 4.73%
Growth rates % (MoM) Mar-11 Feb-11 Jan-11 Dec-10 Nov-10 Oct-10 Sep-10 Aug-10 Jul-10 Jun-10 May-10 Apr-10 Mar-10 Feb-10 Jan-10 Dec-09 Nov-09 Oct-09 Sep-09
Chemicals & Chemical
2.57% 1.56% -3.09% 1.88% 4.05% -0.01% 4.93% 1.03% -0.90% 5.30% -3.42% -3.52% 7.76% 1.37% 2.49% -0.10% 0.19% -0.19% 4.56%
Products
- Sub Industry
Fertilizer 5.33% -1.05% -9.92% 0.26% 12.97% -0.74% -6.41% 11.22% -16.28% 3.61% -11.14% -10.13% 19.65% -0.55% -8.55% -10.44% 0.72% 6.59% 2.13%
Drugs & Pharmaceuticals 6.13% -1.11% 0.61% 1.36% 3.83% 1.32% 3.80% -2.57% 0.41% 6.49% -1.40% -3.75% 6.42% 3.17% 3.03% 3.75% 1.95% -2.45% 7.48%
Petro Chemicals -10.30% 9.50% -16.11% 3.96% 8.60% -9.67% 17.13% 4.88% 1.99% 15.02% -6.33% 8.58% 0.38% 8.14% 0.61% 1.34% 2.01% -11.28% 2.23%
Others 2.93% 2.68% 1.40% 2.19% -1.04% 3.73% 5.24% 0.55% 2.95% 0.35% -1.09% -4.36% 6.99% -2.63% 8.63% 0.62% -3.12% 3.83% 3.23%
Growth rates % (MoM) Mar-11 Feb-11 Jan-11 Dec-10 Nov-10 Oct-10 Sep-10 Aug-10 Jul-10 Jun-10 May-10 Apr-10 Mar-10 Feb-10 Jan-10 Dec-09 Nov-09 Oct-09 Sep-09
Food Processing 4.11% 3.94% 6.24% 5.71% 3.61% -1.03% -0.24% -1.17% -0.28% 2.03% 3.01% 0.42% 8.57% 2.39% 6.18% 3.73% 0.12% -0.97% 1.82%
- Sub Industry
Sugar 8.15% 9.05% 10.96% 3.67% -3.13% -4.38% 1.37% 3.08% -2.92% 1.25% -0.14% 1.08% 6.07% 5.87% 5.66% 0.23% 4.47% -0.67% 2.65%
Edible Oils & Vanaspati -0.75% -2.01% 1.46% 10.64% 16.57% -0.87% -4.38% 0.42% -2.95% 1.18% 3.33% 4.82% 9.86% 5.16% 2.62% 6.38% 8.86% 2.44% -3.18%
Tea 4.36% -0.61% -5.47% -1.83% 0.08% 7.48% 6.82% 5.89% 0.60% 2.71% -2.00% 0.10% -2.06% -2.02% -2.35% 1.48% 2.09% -17.40% 10.77%
Others 3.45% 3.53% 6.31% 5.59% 3.65% 0.27% -0.26% -4.22% 1.94% 2.70% 5.03% -1.27% 10.35% -0.06% 8.21% 5.18% -4.72% -0.60% 2.02%
Color scheme to indicate major Industries Source: RBI, Microsec Research
24th May’ 2011 Microsec Research Research
Microsec

5. Growth rates % (MoM) Mar-11 Feb-11 Jan-11 Dec-10 Nov-10 Oct-10 Sep-10 Aug-10 Jul-10 Jun-10 May-10 Apr-10 Mar-10 Feb-10 Jan-10 Dec-09 Nov-09 Oct-09 Sep-09
Textiles 2.31% 3.19% 5.22% 2.23% 1.84% 1.12% 1.32% -0.40% 0.98% 0.67% -0.68% 0.08% 3.81% 1.99% 2.94% 3.17% 1.34% 0.29% 0.18%
- Sub Industry
Cotton Textiles 2.73% 4.17% 6.78% 2.54% 1.96% 0.78% 3.20% -0.99% 0.22% -0.64% -0.53% -0.62% 3.16% 1.69% 2.95% 4.14% 1.59% 0.82% 1.27%
Jute Textiles -24.78% 33.72% 9.30% 1.27% 0.86% 7.44% 4.91% -1.27% -5.27% 1.61% 0.77% -6.01% -2.61% 4.81% 0.00% 0.97% -11.32% 15.44% -1.58%
Man-Made Textiles -0.72% 1.12% -1.15% -0.87% -0.35% -8.51% -2.06% 0.86% -0.98% 5.98% -4.71% 4.55% 1.18% -3.38% 6.15% 19.11% 31.03% 2.37% -0.09%
Other Textiles 3.36% 1.52% 4.51% 2.53% 2.21% 3.76% -0.21% 0.03% 2.62% 1.03% 0.12% 0.06% 5.56% 3.79% 2.16% -1.52% -3.37% -1.13% -1.00%
Color scheme to indicate major Industries Source: RBI, Microsec Research
Among Food processing sugar & edible oil showed good growth After a crash in tea prices worldwide bank’s exposure to tea industry
processing, growth. worldwide, bank s
also came down in recent months. Among textiles, cotton textiles showed consistent growth. However in case of Jute textiles there was
huge variation in last two months. Man-made textiles showed moderation in growth. Among chemical & chemical products, fertilizer &
petrochemical showed variability in MoM growth rates. Credit off take towards Pharma was more stable. Among infrastructure, credit
deployment towards power industry remained very stable, telecommunication showed some de-growth due to high base effects of last
year when 3G auctioning happened. Road also saw good amount of credit off take in last 3-4 months.
Conclusion:
Industry wise credit growth showed some what clearer picture. Infrastructure exposure of most of the banks were on the higher side, this
may slowdown the credit deployment growth towards this sector in coming months. Beside this, with increasing rates, more and more
infra projects may become economically not feasible. Add to that, the asset liability mismatch in case of infra funding may deter banks in
taking further exposure to this industry. However, infrastructure being key industry in an emerging economy like India, the credit
deployment has to happen sooner or later. Reducing exposure to industries like petroleum and chemical products is quite understandable
as higher crude oil prices increases the pressure on oil companies as they have to sell diesel, kerosene and LPG at government-set prices
that are much lower than the cost of imported fuels. Falling cotton prices will have a positive impact on the textile industry which may
see rebound in credit deployment towards this industry as economic feasibility returns.
p y y y
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6. Industry wise exposure of major banks:
Axis bank (FY11) HDFC Bank (FY10)
Industry % of fund based O/S advances Industry % of fund based O/S advances
Retail Assets 47.45%
Others 31.98%
Automobile and Auto Ancillary 6.27%
Infrastructure 12.60% Roads & Ports 5.01%
Chemicals / Dyes / Paints etc. 8.17% Fertilisers and Pesticides 4.65%
Iron & Steel 6.91% NBFC / Financial Intermediaries 4.65%
NBFCs & Trading 6.82% Home Finance Companies 3.05%
Agriculture and allied activities 2.67%
All Engineering 3.56%
Real Estate and Property Services 2.30%
Food Processing 3.05%
Services 2.08%
Cotton Textiles 2.65% Other Industries 2.08%
Gems & Jewellery 2.35% Food and Beverage 2.00%
Computer Software 2.05% Coal and Petroleum Products 1.79%
Cement 1.92% Engineering 1.79%
Vehicles, Vehicles Parts & Transport Iron & Steel 1.73%
Equipments 1.68% Power
P 1.58%
1 58%
Other Textiles 1.67% Drugs & Pharmaceuticals 1.34%
Textile 1.17%
Edible oils and vanaspati 1.31%
Non-ferrous Metals and Products 1.13%
Sugar 1.05%
Gems & Jewellery 0.96%
Paper / Paper Products 0.98% Capital Market Intermediaries 0.92%
Mining 0.83% Chemical and Chemical Products 0.89%
Construction 0.73% Information Technology 0.83%
Rubber / Rubber Products 0.64% Construction and Developers 0.76%
Cement and Cement Products 0.71%
Petroleum 0.36%
Telecom 0.65%
0 65%
Glass and Glass Products 0.13%
Paper, Printing and Stationery 0.61%
Leather & Leather Products 0.10% FMCG and Personal Care 0.40%
Tea 0.08% Mining and Minerals 0.36%
Jute Textiles 0.03% Airlines 0.16%
ICICI Bank (FY10) YES Bank (FY10)
Industry % of fund based O/S advances Industry % of fund based O/S advances
Retail Finance 37.04% Other Industries 33.61%
Chemicals / Dyes / Paints etc. 8.40%
Services - finance 8.05%
Telecommunication
T l i ti 8.06%
8 06%
Services - non finance 7.93%
Power 7.47%
Other Industries 6.24% All Engineering 6.33%
Petroleum 5.14% Construction 5.94%
Mutual funds 4.21% NBFCs & Trading 4.25%
Roads & Ports 3.97% Infrastructure (ex power, telecom & const) 3.95%
Beverages 3.96% Food Processing 3.34%
Iron & Steel 3.72% Iron & Steel 3.16%
Trading 3.02%
Power 3.63%
Cement 2.50%
Chemicals / Dyes / Paints etc.
etc 2.57%
2 57%
Sugar 1.83%
Electronics 2.42%
Automobiles & Trucks 1.13%
Metal Products 1.59% Rubber / Rubber Products 1.07%
Drugs 1.20% Roads & Ports 0.95%
Cement 1.06% Computer Software 0.68%
Gems & Jewellery 1.00% Other Textiles 0.68%
Manufacturing products excluding metal 0.99% Coal 0.64%
Textile 0.97% Vegetable Oils & Vanaspati 0.57%
Electricity 0.51%
Mining 0.92%
Gems & Jewellery 0.38%
Construction
C t ti 0.92%
0 92%
Petroleum 0.34%
Automobiles & Trucks 0.90% Mining 0.33%
Shipping 0.76% Paper / Paper Products 0.31%
FMCG and Personal Care 0.72% Tea 0.30%
Venture capital funds 0.09% Cotton Textiles 0.27%
Source: ACE Equity, Microsec Research
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7. Bank of Baroda Bank (FY10) Punjab National Bank (FY10)
Industry % of fund based O/S advances Industry % of fund based O/S advances
Infrastructure 19.42% Infrastructure 16.10%
Electricity 10.17%
Other Industries 14.86%
NBFCs & Trading 10.10%
Iron & Steel 10.21%
Iron & Steel 9.15%
Trading 8.18% Trading 9.20%
Other Textiles 5.80% NBFCs & Trading 5.71%
All Engineering
g g 5.72% All Engineering 5.00%
Chemicals / Dyes / Paints etc. 5.11% Other Textiles 3.55%
Petroleum 3.90% Food Processing 3.43%
Cotton Textiles 3.78% Chemicals / Dyes / Paints etc. 3.06%
Construction 3.47% Electricity 2.77%
Plastics and Plastic Products 2.18% Construction 2.47%
Automobiles & Trucks 1.96%
Sugar 2.28%
Metal Products 1.84%
Cotton Textiles 1.76%
Food Processing 1.78%
Automobiles & Trucks 1.60%
Paper / Paper Products 1.08%
Cement 1.02% Paper / Paper Products 1.41%
Gems & Jewellery
G J ll 0.94%
0 94% Cement 1.32%
1 32%
Mining 0.93% Gems & Jewellery 1.23%
Glass and Glass Products 0.60% Petroleum 1.12%
Sugar 0.56% Other Metal & Metal Products 1.07%
Vegetable Oils & Vanaspati 0.54% Mining 0.99%
Leather & Leather Products 0.35% Vegetable Oils & Vanaspati 0.56%
Beverages 0.35% Leather & Leather Products 0.40%
Rubber / Rubber Products 0.33%
Rubber / Rubber Products 0.20%
Wood & Wood products 0.29%
Jute Textiles 0.13%
Computer Software 0.18%
Coal 0.08%
Jute Textiles 0.13%
Coal 0.07% Computer Software 0.04%
Tea 0.05% Tobacco / Tobacco Products 0.03%
Tobacco / Tobacco Products 0.03% Tea 0.01%
State Bank of India (FY10) IDBI bank (FY10)
Industry % of fund based O/S advances
Industry % of fund based O/S advances
NBFCs & Trading 27.61%
Other Industries 19.34% Retail Loans 21.60%
Infrastructure 9.98% Power 14.91%
Iron & Steel 7.45%
Iron & Steel 8.76%
Petroleum 4.88%
Chemicals / Dyes / Paints etc. 3.90% Textile 5.89%
Cotton Textiles 3.61% NBFCs & Trading 5.86%
All Engineering 3.44%
Telecommunication 4.99%
Other Textiles 2.91%
Food Processing 2.57% Housing Loans 4.98%
Construction 1.84% Beverages 4.40%
Gems & Jewellery 1.81%
Commercial Real Estate 3.56%
Meta oducts
Metal Products 1.40%
. 0%
Automobiles & Trucks 1.33% Construction 3.32%
Electricity 1.27% Electronics 3.00%
Sugar 1.14%
Sugar 2.91%
Cement 1.02%
Mining 0.92% Oil and Gas 2.59%
Paper / Paper Products 0.85% Chemicals / Dyes / Paints etc. 2.36%
Vegetable Oils & Vanaspati 0.77%
Roads & Ports 2.34%
Computer Software 0.51%
Rubber / Rubber Products 0.48% Trading 2.10%
Coal 0.43%
0 43% Petroleum 1.96%
1 96%
Leather & Leather Products 0.30%
Electrical Machinery 1.72%
Tobacco / Tobacco Products 0.10%
Tea 0.07% Fertilizers 1.48%
Jute Textiles 0.05% Engineering 1.28%
Source: ACE Equity, Microsec Research
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8. IOB (FY10)
Exposure to probable
Industry % of fund based O/S advances
trouble some sectors
Infrastructure 25.75% MFI Exposure as % Telecom exposure as % Infra exposure as % of
(FY10)
Other Industries 13.27% of advances of advances Advances
Iron & Steel 11.83%
Axis Bank 1.20% 2.10% 12.62%
Cotton Textiles 7.75%
All Engineering 6.10%
HDFC Bank 0.80% 0.65% 6.80%
Construction 5.22%
NBFCs & Trading 4.59%
ICICI Bank 1.20% 1.38% 12.90%
Chemicals / Dyes / Paints etc. 4.41%
Other Textiles 3.46%
State Bank of India 0.10% 1.90% 9.98%
Paper / Paper Products 2.87%
Automobiles & Trucks 2.40%
Indusind Bank 1.48% 1.80% 3.50%
Other Metal & Metal Products 2.36%
Sugar 2.07%
YES Bank 1.51% 8.06% 22.50%
Petroleum 1.39%
Mining 1.25%
PunjabNationalBank 0.40% 3.10% 16.10%
Rubber / Rubber Products 1.24%
Food Processing 0.88%
BankofBaroda 0.10% 3.30% 19.42%
Gems & Jewellery 0.76%
Leather & Leather Products 0.56% IndianOverseasBank 0.80% 1.70% 25.75%
Electricity 0.55%
Computer Software 0.43% IDBI bank 1.05% 4.99% 22.10%
Vegetable Oils & Vanaspati 0.37%
Coal 0.28% Dena Bank 0.30% 3.41% 26.00%
Tobacco / Tobacco Products 0.11%
Tea 0.05% Allahabad Bank 0.20% 2.3% 17.80%
Jute Textiles 0.05%
% Share of % Share of % Share of % Share change % share change
FY09 FY10 FY11
Total loan Total loan Total loan (FY11/FY10) (FY11/FY09)
Agriculture & Allied Activities 3,387 13.0% 4,161 13.7% 4,603 12.6% -114 -47
Industry 10,544 40.5% 13,115 43.1% 16,208 44.2% 105 367
Food Processing 538 2.1% 657 2.2% 849 2.3% 15 25
Textiles 1,027 3.9% 1,214 4.0% 1,447 3.9% -5 0
Chemicals 756 2.9% 857 2.8% 945 2.6% -24 -33
Basic Metal 1,288 5.0% 1,629 5.4% 2,099 5.7% 36 77
Engineering 658 2.5%
2 5% 738 2.4%
2 4% 932 2.5%
2 5% 11 1
Construction 385 1.5% 442 1.5% 501 1.4% -9 -11
Infrastructure 2,700 10.4% 3,799 12.5% 5,267 14.4% 186 398
Other Industries 3,193 12.3% 3,778 12.4% 4,167 11.4% -107 -91
Services 6,463 24.8% 7,268 23.9% 9,008 24.6% 65 -28
Transport Operators 393 1.5% 525 1.7% 655 1.8% 6 28
Professional Services 454 1.7% 434 1.4% 603 1.6% 22 -10
Trade 1,444 5.6% 1,645 5.4% 1,863 5.1% -33 -47
Commercial Real Estate 924 3.6% 921 3.0% 1,118 3.0% 2 -50
NBFCs 989 3.8% 1,134 3.7% 1,756 4.8% 106 99
Other S
Oth Services
i 2,260
2 260 8.7%
8 7% 2,608
2 608 8.6%
8 6% 3,014
3 014 8.2%
8 2% -36
36 -47
47
Personal Loans 5,625 21.6% 5,856 19.3% 6,854 18.7% -57 -293
Housing 2,794 10.7% 3,009 9.9% 3,461 9.4% -46 -130
Advances against FD 487 1.9% 487 1.6% 605 1.6% 5 -22
Credit Cards 280 1.1% 201 0.7% 181 0.5% -17 -58
Education 286 1.1% 369 1.2% 437 1.2% -2 9
Vehicle Loans 621 2.4% 638 2.1% 793 2.2% 6 -22
Other Personal Loans 1,158 4.5% 1,153 3.8% 1,376 3.8% -4 -70
Source: RBI, ACE Equity, Microsec Research
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9. Growth momentum to moderate
With the RBI turning more hawkish in recent times and with the control of inflation being a clear agenda, the growth momentum of the
economy is bound to slow down, hurting the demand for bank credit. The continued hike in interest rates & policy changes has led to a
change in the operating environment of the banking sector.
The credit growth in FY11 came in marginally higher than RBI’s expectations at 21.5%. We believe the demand during H2’FY11 was
largely driven by working capital related funding and the regular Capex exercise of the corporate whereas the large ticket Capex activity
slowed down due to multiple headwinds relating to land acquisitions and environmental clearances.
We expect the growth drivers to shift from infrastructure to other sectors such as manufacturing, retail, agriculture and other Industries.
The Industries directly related to infrastructure will also see some moderation. We believe the new growth expectation of RBI isn’t
showing the ground reality as continued rise in policy rates may have much bigger impact on industry growth than anticipated. We
expect 18% credit growth in FY12. Higher interest rates are not conducive to the Capex environment and therefore we believe due to
this, big ticket Capex activities will slow d
thi bi ti k t C ti iti ill l down i FY12 Hi t i ll it h b
in FY12. Historically, has been seen th t i hi h i t
that in higher interest rate environment, th credit
t t i t the dit
growth moderates. We expect the credit growth to be affected this time too.
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10. Notes
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