Fortnightly round up of key banking and economic indicators - December 31, 2012 - Emkaynomics

- Non-food credit growth for the last reported fortnight came in at 16.0% yoy vs 16.8% yoy in corresponding period of last year. On a YTD basis, growth is up +7.1%. Sales growth deceleration, sticky inflation and slowing capex and investment activities point towards easing credit growth for FY13 (as highlighted in our report India Strategy: Early to call off PSU banks de-rating)

- Deposit growth remains muted at 13-14% yoy levels and can be attributable to lower real interest rates and declining financial savings. On the flip-side, demand deposit growth although lower at 9.2% yoy has improved from 6.6% yoy in Sept'12

- SLR investments continue to remain higher at 30% of NDTL vs regulated requirement of 23% of NDTL. SLR investments are up 13% YTD. Money supply (M3) growth has eased further to sub-13%; M1 growth was 10.6% yoy

- G-sec yields have eased in recent past on the expectations of a possible rate easing in CY13 and the on-going OMO operations. RBI has already infused Rs390bn via OMO in Dec'12. 10-yr / 1-yr Gsec has eased to 8.11% / sub-8% respectively

- Borrowings under LAF window has risen to avg ~Rs1100bn for Dec'12 or ~2% of NDTL vs ~Rs900bn for Q3FY12 on back of advance tax outflows and increased borrowing towards state development loans (more of seasonal in nature and typically in H2)

- Call money rates were at 8% levels. Spreads of 10-yr AAA corporate bonds over 10-yr G-sec have eased to sub-100bps vs ~120bps for period July-Oct' 12

Source : Equity Bulls

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