Summary:
Axis Bank, one of India’s leading private sector banks, has announced that it does not intend to sell down its loan portfolio to manage its credit-to-deposit (CD) ratio. This decision comes amidst concerns about the widening gap between credit growth and deposit growth in the Indian banking sector. The bank’s management stated that the cost of deposits remained stable quarter-on-quarter and expressed comfort with the current CD ratio. This suggests that Axis Bank is confident in its ability to manage liquidity and maintain its growth trajectory despite the challenges posed by the current market dynamics.
Key Insights:
- Focus: The news highlights Axis Bank’s strategy for managing its CD ratio in the face of industry-wide concerns about credit growth outpacing deposit growth.
- Key Events: Axis Bank’s decision to not resort to selling down its loan book is a significant event. This indicates the bank’s confidence in its current liquidity position and its ability to attract deposits.
- Potential Impact: This news could have a positive impact on investor sentiment towards Axis Bank, as it signals the bank’s financial stability and strategic approach. It also reflects the bank’s focus on sustainable growth rather than pursuing aggressive lending practices.
Investment Implications:
It would be prudent to compare Axis Bank’s performance and strategies with its peers in the private banking sector to gain a comprehensive market perspective.
Axis Bank’s stance suggests a prudent approach towards managing its loan book and deposit base. This could be viewed positively by investors seeking stability and sustainable growth.
The bank’s confidence in its current CD ratio indicates that it may not need to aggressively raise deposit rates, which could help protect its net interest margins.
Investors should monitor the bank’s credit growth and deposit growth trends in the coming quarters to assess the effectiveness of its strategy.
Sources:
CNBC-TV18: 24 Out Of 39 Lenders See Decline In CD-Ratio In The Last 2 Qtrs
Livemint: Axis Bank reiterates system deposit, credit growth to converge over FY25
