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Mid-Sized Banks Outshine Giants in Deposit Growth
31 Jul
Summary
- IDFC First Bank saw its Casa ratio climb to 50.8%.
- Select mid-sized banks improved low-cost deposits significantly.
- Larger banks experienced a decline in their Casa ratios.
In the recent June quarter, mid-sized private banks have outperformed their larger counterparts by effectively mobilizing low-cost deposits. IDFC First Bank reported the most substantial improvement, with its Current and Savings Account (Casa) ratio rising to 50.8% from 48% year-on-year. The bank's CEO, V Vaidyanathan, highlighted a deliberate strategy to slow loan book growth and focus on building the Casa ratio to 50% over several years.
Bandhan Bank and Federal Bank also saw notable increases in their Casa ratios, improving by 234 basis points to 29.4% and 188 basis points to 32.23%, respectively. This focus on liability growth is changing branch Key Performance Indicators. Conversely, major private banks like HDFC Bank and Axis Bank experienced declines in their Casa ratios, falling by 160 and approximately 200 basis points respectively.
This recent performance occurs against a backdrop of a five-year erosion in low-cost deposit ratios across the banking industry. Over this longer period, most analyzed banks, including Kotak Mahindra Bank and ICICI Bank, saw significant decreases in their Casa ratios. Only IDFC First Bank and YES Bank managed to improve their ratios over the five-year span, indicating a potential divergence in strategic approaches to deposit mobilization.
