India’s top private banks are betting on a sustained pick up in lending after reporting healthy numbers in the first quarter of the fiscal year, as more companies shift away from pricier bond market borrowings to cheaper loans.
At least six private banks reported robust loan growth in the three months to June, driven by corporate lending, as high bond yields make market funding less attractive.
HDFC Bank Ltd., India’s largest private lender by assets, reported a nearly 19% jump in corporate loans in the quarter, compared with a 1.7% growth a year earlier. ICICI Bank Ltd.’s domestic corporate loans rose 18.5% from a year earlier, while Kotak Mahindra Bank Ltd. posted a 15% increase.
Corporate loan demand was driven by working capital needs, while moderation in borrowing from bond and equity markets also created lending opportunities for banks, ICICI’s Executive Director Sandeep Batra said in the lender’s earnings call Saturday.
“It will be a secular loan growth across sectors in the next two quarters,” said Yes Bank Ltd. Chief Executive Officer Vinay Tonse. The bank, which has largely been focusing on the retail segment, saw its corporate and institutional loan book expand more than 41%.
