INSUBCONTINENT EXCLUSIVE:
Loans grew 13 per cent in year-on-year in June 2018 versus 8 per cent year-on-year growth in deposits
Concerns over liquidity may be overdone at this stage, since if we were to look at a couple of years growth rates, which will smoothen the
base effects, we see a similar growth rate of about 9 per cent for both credit and deposits.
The credit-deposit ratio for the system as a
whole is now closer to the medium-term trend number of 75 per cent
The systemic liquidity is also closer to neutral level
However, yields on 1-year, 3-year, 5-year and 10-year G-Secs are at multi-quarter high levels at this stage
CD rates have cooled off over the past two months, but that may be temporary as of now.
Within the loans segment, growth in retail advances
continues to outpace demand from industry
Within the retail category, unsecured loans are growing faster than secured loans.
Personal loans and credit cards are growing at 30 per
cent, while growth in mortgage and auto loans is lagging at 10-15 per cent
With industry-wide capacity utilisation still rangebound, a turnaround in capex cycle and, thus, corporate demand for capital seems some
time away.
Growth in life insurance premium has slowed down, though on a high base
Individual APE growth for the industry has slowed in June quarter, with the private sector growing at 3 per cent YoY and LIC at 7 per cent
Retail flows to mutual funds are still strong with monthly SIP numbers at record highs of over Rs 7,000 crore in June 2018.
Net monthly
flows to equity funds were less than Rs 10,000 crore in June, which was substantially above this number over the past one year.
Inflow to
balanced funds also has tapered off over the past couple of months
With the introduction of 10 per cent capital gains tax on equity funds and 10 per cent dividend tax on equity funds in Budget 2018, there
appears to be a switch to single premium Ulips, which are relatively more tax efficient
For private life insurers individual single premium policies have grown over 65 per cent YoY since the Budget announcement.
