Banks share price target

Private sector banks rose 82.9% YoY in value of transactions, while public sector banks' value of transactions were up 80.5% YoY.

The Monetary Policy Committee (MPC) decided by a majority of five members out of six to further hike policy repo rate by 50bps to 5.9% on September 30, ‘22.

Bank credit sectoral deployment data for Aug’22 suggests YoY uptick across all verticals - 19.5% in retail credit, 17.2% in services, 13.4% in agri portfolio and 11.4% in industry.

Overall during Q1FY23, the values of loans, deposits and CASA improved for most listed banks. HDFC Bank remains at the top in bank operations.

We visited Bengaluru (the topmost credit market in Karnataka, with advance base of ~Rs5trn) and Tumakuru (the 7th largest, Rs112bn) – to interact with key market participants including vehicle dealers, MFIs and SME lenders.

Gauging MSME credit pulse (Source: TransUnion CIBIL and SIDBI) suggests: i) MSME credit demand has gathered pace to 1.6-1.7x of pre-covid levels; ii) MSME disbursements were up 32% in Fy22 and private banks market share has increased across segments; iii) 55% of new originations in FY22 were in CMR4 to CMR6 (medium risk) and 24% in the CMR1 to CMR3 (low risk) category. 60% of new MSMEs loans originated in FY22 had >78% utilisation levels (high utilisation category); iv) Private banks NPA from MSME sector was stable at 5.5% in Q4FY22, it increased for NBFC to 9.6% and for PSU banks to 20.8%