Personal loan growth boosted loan outflow in April: HDFC Securities


Growth in the personal loan segment increased the loan outflow in April, HDFC Securities said.

Accordingly, the personal loan segment saw further growth improvement of 12.6 percent year-over-year after hitting a 10-year low in January of 9.1 percent year-over-year.

“This was led by growth in home and other personal loans. Credit card receivables growth improved to 17.1 percent year-over-year,” HDFC Securities said in a report.

“Vehicle lending growth hit a 32-month high of 11.7 percent year over year. We believe the personal lending segment is likely to remain resilient to bounce back from the ‘second wave’ disruption.”

In addition, agricultural credit growth continued to accelerate, reaching 11.3 percent year-over-year, boosted by successive monsoon surpluses.

According to the report, after the March run-up, industrial loan growth was subdued as large industrial loans, which accounted for 82 percent of industrial loans, declined 1.9 percent year-over-year in the absence of a strong investment cycle.

“Growth in lending to midsize industries continued to grow, reaching an all-time high of 43.8 percent year-on-year, supported by withdrawals under the ECLGS.”

“However, micro- and small-industry lending was cheap at 3.8 percent year-over-year. Within industrial lending, road lending saw healthy growth of 26.2 percent year-over-year.”

According to the report, segments such as metals, engineering, chemicals, telecommunications and construction saw continued year-over-year growth.

Additionally, the report cited that credit growth in the service sector continued to slow, reaching 1.2 percent year-on-year in April 2021.

“In this segment, growth in lending to NBFCs declined 3.4 percent year-over-year, while lending growth for ‘other services’ declined 11.1 percent year-over-year.”

Overall trade credit growth increased 10.5 percent year-over-year, however, while trade credit growth (wholesale and retail), one of the few segments unaffected by the pandemic, improved to 21.9 percent year-over-year.

Furthermore, the report said: “We continue to believe that while credit growth will recover in the short term from the short-term ‘second wave’ disruption, a sustained recovery in credit growth seems elusive until the capex cycle resumes.”


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(Only the headline and image of this report may have been revised by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)

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