INDIAN BANKING: Loan growth increases to 22.7%; Deposits show uptick; CD Ratio remains flat - Motilal Oswal

• Loan growth increased to 22.7% YoY vs 22% a fortnight earlier. Loans in absolute terms increased by Rs273b during the fortnight.
• Deposits in absolute terms increased by Rs 394b; deposit growth improved to 15.8% as compared to 15.3% a fortnight ago.
• We expect credit growth of 20% for FY11 with an upward bias backed by robust economic growth outlook, increased business confidence, new capex cycle.
• Incremental CD ratio continues to remain high at ~100%. With 3Q and 4Q being the busy season, credit growth is expected to remain strong.
• We expect margins to decline in 2HFY11 vs those reported in 1HFY11 on account of faster increase in deposit rates.
• Among state-owned banks, SBI, Canara Bank, PNB and Dena Bank are our top picks. ICICI Bank, Yes Bank and ING Vysya Bank are our top picks among private banks.

Source : Equity Bulls

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