The first quarter of FY25 was not all rosy for banks. While It was a period marked by healthy credit growth on a YoY basis, overheated CD ratios, NIM compression due to tapering yields and increased cost of deposits were the other prevalent trends. Here we analyse how the top three private lenders and SBI fared during the quarter.

ICICI and SBI shine in credit growth

The credit growth for all Scheduled Commercial Banks (SCBs) combined came in at 17.4 per cent YoY in Q1 FY25. While all four banks compared here reported healthy credit growth, it was ICICI and SBI that came closer.

SBI lags in deposit growth

HDFC, ICICI and Axis outperformed system level deposit growth, while SBI lagged behind.

CASA ratios shrink

All four banks found it difficult to mobilise the low-cost CASA deposits (Current Account Savings Account) this quarter and so CASA ratios were impacted.

SBI’s CD ratio provides comfort

While there is demand for credit, banks have had a hard time gleaning incremental deposits, with household savings increasingly turning to capital markets. And it showed in their overheated CD ratios (Credit Deposit ratio). However, SBI stands out.

Deposits got expensive

As deposits got scarce, banks ramped up deposit rates. As a result, their NIMs (Net Interest Margin) bore the brunt. Nevertheless, Axis and SBI have tackled the NIM compression smartly.

Yields tapering

Another factor that is causing NIM compression is that the yields on advances are tapering from the peaks of Q4 FY24. HDFC’s has stayed flat though.

Note: Combined data of all SCBs taken from RBI DBIE

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