Indian banks to see range-bound 12.5% credit growth in 2024-25: HSBC

HSBC Securities and Capital Markets (India) Private Limited, in the report dated January 2, said it expects 2024-25 credit growth to remain range-bound.

"Multiple headwinds like tight liquidity conditions, muted growth in deposits, GDP slowdown and high loan-to-deposit ratio remain key risks to credit growth," HSBC said.

Retail loan growth increased in November 2024, driven by unsecured personal loans, home loans and sustained growth in gold loans. There has been some reprieve in credit to NBFCs too.

In November 2024, non-food credit grew by 12.2 per cent year-on-year and 1.3 per cent month-on-month compared to 12 per cent year-on-year and 0.7 per cent month-on-month in October 2024.

Retail loans grew by 13.3 per cent year-on-year and 1.5 per cent month-on-month, MSME loans by 13.8 per cent year-on-year and 0.7 per cent month-on-month and corporate loans by 9.6 per cent year-on-year and 1.5 per cent month-on-month in November 2024.

There was a broad-based growth pick-up across most major retail loan segments, the report asserted.

Home loans grew by 12.2 per cent year-on-year and 1.3 per cent month-on-month (0.9 per cent in October 2024).

Growth in the home loan segment should remain stable driven by healthy demand for residential housing, the HSBC report said.

Vehicle loans declined by 1.8 per cent month-on-month in November, largely impacted by muted vehicle sales.

Gold loans increased by 6.7 per cent month-on-month and contributed to 12 per cent of incremental retail loans in November 2024.

"In our view, slowdown in microfinance loans has increased the demand for gold loans as an alternate source of borrowings," the report argued.

Credit card receivables grew by 18.1 per cent year-on-year in November 2024 (16.9 per cent year-on-year in October 2024).

"Receivables growth is now higher than growth in spending through credit cards," it said. (ANI)