Banks continue to report low CASA growth in Q2FY24
Banks prefer low cost CASA deposits as they are a cheaper source to fund credit growth during the rising interest rate regime
Mumbai: With fixed deposits offering over 8 per cent, banks are likely to continue to report a decline in low cost current account saving accounts (CASA) for the second quarter of this fiscal as customers move to higher yielding fixed deposits, mutual funds to park their money. According to the quarterly financial updates filed by lenders namely IndusInd Bank, Federal Bank, Karur Vysya Bank, while they reported a strong growth in advances largely driven by retail loans, CASA growth slowed for all of them.
IndusInd Bank’s CASA Ratio declined to 39.4 per cent as on September 30, 2023 as against 39.9 per cent as on June 30, 2023 and 42.4 per cent as on September 30, 2022. The Bank’s net advances stood at Rs 3.14 lakh crore as on September 30, 2023, up 5 per cent QoQ from Rs 3 lakh crore as on June 30, 2023 and up 21 per cent YoY. Deposits were at Rs 3.59 lakh crore as on September 30, 2023, up 4 per cent QoQ from Rs 3.47 lakh crore as on June 30, 2023 and up 14 per cent YoY.
Similarly, Federal Bank’s the CASA deposits were up 5 per cent year-on-year to Rs 72,592 crore. With this, the CASA ratio for the quarter ending Sept 30, 2023 stood at 31.17 per cent down 68 basis points from the previous quarter. However, its Certificates of Deposit more than doubled to Rs 9,940 crore, compared to Rs 4,186 crore in the same quarter the previous year. Tamil Nadu based Karur Vysya Bank also saw a CASA growth of mere 3.4 per cent year on year to Rs 26,795 crore.
Banks prefer low cost CASA deposits as they are a cheaper source to fund credit growth during the rising interest rate regime and lead to better profit margins.