The pandemic year 2020-21 has seen a muted bank credit growth of just over 5 per cent in the economy. The challenges for banks in growing their credit ranged from corporate de-leveraging, near absence of capex, and also loan restructuring in stressed companies. The big corporate also took the bond market route to raise low cost resources as interest rates fell to an all-time low and the Reserve Bank of India (RBI) provided long-term repo money to banks for directed lending to some sectors. While public sector banks (PSBs), saddled with asset quality issues and merger integration process, continue to lose market share in corporate banking, private sector banks continue to grow their loan book. Here are some trends:
Commercial paper and corporate comes to SBI's rescue
The largest bank in the country, the State Bank of India (SBI), has witnessed a 3 per cent de-growth in its corporate advances. The advances to corporate fell from Rs 8.44 lakh crore in 2019-20 to Rs 8.18 lakh crore in 2020-21. However, if one adds the bank's exposure to corporate by way of short-term commercial paper (CPs) and corporate bonds (CBs), the loan growth was 2.64 per cent year-on-year. The bank had subscribed to CPs and CBs issued by corporate worth Rs 51,811 crore.
HDFC Bank's corporate book has overtaken retail loans
The country's largest private sector lender HDFC Bank's share of loan mix has made a big shift to corporate post the pandemic as the corporate loan book is growing at a higher rate. A couple of years ago, retail assets had a higher share than corporate. Currently, the corporate book is around 53 per cent and the retail is down at 47 per cent of the loan book. In 2020-21, the domestic retail loans have shown a growth of 6.7 per cent, and domestic wholesale loan books grew by a robust 21.7 per cent. The growth in the wholesale book is coming from large, mid and SMEs. Clearly, the bank is gaining market share on the corporate side, which is vacated by the PSBs.
ICICI Bank's renewed focus on corporate as a cross-sell opportunity
For the last few years, the ICICI Bank, which had some setbacks earlier in terms of asset quality, has started growing its corporate loan book with highly rated companies and the PSUs. In 2020-21, the bank grew its domestic corporate portfolio at around 13.2 per cent year-on-year. The bank has been trying to offer a full solution to the corporate including its suppliers and distributors. The opportunity ranges from capturing as much business (forex, investments, salary) as possible apart from loan exposure, but also tap their ecosystem. The bank has been trying to offer a full solution to the corporate including its suppliers and distributors. The bank is also looking at the services sector in a big way as against its earlier focus of long gestation manufacturing sector.
Axis Bank is riding high in the mid corporate segment
The bank has seen its corporate loan book growing by 16 per cent in 2020-21, which is very high. This also includes the funds sourced from RBI under long term repo arrangement post the COVID outbreak. The PSUs and MNCs are also two areas where the bank has been growing its book. Unlike earlier strategy, the bank is now looking at a more granular corporate book which includes high-rated corporate and also mid-corporate.
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