HDFC Bank's Q2 loan growth might be indicative of economic recovery amid rising interest rates

12 Oct 2022 , 09:10 AM

Even while higher interest rates help the net interest margins (NIMs), an increase in loans to the retail and corporate sectors is helping banks turn the corner.

Strong credit growth in the second quarter indicates that the economy is recovering and that despite increasing inflation and rising interest rates, consumers are not cutting back on purchases.

The loan book of private sector lender HDFC Bank experienced a spectacular rise of 23% in the quarter ending in September, which is a significant 700 basis points or 7% higher than the systemic growth.

Retail, commercial, and rural banking loans have driven the growth. According to preliminary figures, it has advances totalling Rs14.80 lakh crore compared to a loan book total of Rs11.98 lakh crore during the same period last year.

While domestic retail loans and corporate & wholesale loans showed increases of over 20% over the prior year, commercial and rural banking loans climbed by 31.5%.

The bank introduced the SmartHub Vyapar merchant app, which will serve the demands of the community of retailers.

Another benefit of the merger with a mortgage lender is that it will enable HDFC Bank to increase the number of long-term mortgage loans on its balance sheet.

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