India Banking – Commercial Bank CASA Mobilization Pace Expected Moderate at 12.5%

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Systematix Research Report

India’s banking sector current and savings account growth narrative has weakened with CASA growth of 2.4% QoQ / 14.5% YoY / 6.3% YTD the year at the end of December 2021 (compared to 3.0% over one quarter/15.2% over one year/9.2% since the start of the year).

Considering the number of growth since the beginning of the year, we are of the opinion that the banking system would not even be able to register an annual growth rate of 14% by the end of March 2022.

CASA’s decline was driven by both checking and savings account deposits, which grew 0.5% and 7.9% on a YTD basis at end-December 21 (vs. 3.0 % and 10.9% on a YTD basis at the end of December 20).

We expect CASA’s growth rate to fall from the cliff (17.6% YoY in Mar-2021) to 12.5%-13.5% YoY in Mar-22. It is important to note that the mobilization of term deposits weakened further to 6.0% over one year/3.7% over one year against 8.2% over one year/6.1% over one year in December 2020.

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