The quarterly business updates from banks ahead of earnings announcements, indicate that loan growth was strong in Q4FY22. According to data released from RBI, total advances grew 9.6% YoY to Rs 118.9 lakh crore in Q4FY22 with private banks contributing 50.4%, over half of total advances, while public sector banks lagged behind with a contribution of 44.7%. Brokerages like ICICI Securities, and Emkay Global attribute this to an increase in economic activity and healthy business growth in Q4FY22. 

Loan growth will remain steady going forward, and growth will be mostly driven by loans to SMEs and retail loans, according to ICICI Securities. This trend is pervasive across banks. HDFC Bank’s Q4FY22 loan advances grew 21% YoY to Rs 13.7 lakh crore with retail loans growing 15% YoY at the end of Q4FY22. Similarly, Federal Bank’s gross advances grew 9.5% YoY to Rs 1.5 lakh crore, and retail advances grew 10.4%, higher than the remaining segments.

Corporate credit growth has picked up pace and is contributing well to loan growth for banks. HDFC Bank’s corporate loan growth was higher than retail loan growth at 17.5% YoY. Even IDFC First Bank’s corporate loans grew 6% YoY. With industrial growth picking up, this segment is likely to report better growth than FY21. This, according to ICICI Securities, can lead to a 20% YoY growth in net interest income for banks in Q4FY22.