Private lenders pip PSBs in FY16 CASA deposit growth

Mumbai, June 14: As if inferior asset quality, lower loan growth and record losses were not bad enough, public sector banks (PSBs) have lost out to their private sector peers even when it comes to current account savings account (CASA) deposit growth in FY16.

A detailed FE analysis reveals that while the top 10 PSBs saw their CASA deposits grow by 11.9% in FY16, the top six private sector banks reported an increase of 23.1%.

In fact, except for Union Bank of India, each of the other nine public sector banks saw their CASA deposits grow at a slower rate than that notched up by any of the private sector banks in the sample.

However, despite this, given their smaller base, CASA, as a percentage of total deposits, of these 10 banks put together improved by 188 bps during the year to 34.36%.

Within private sector banks, YES Bank saw its CASA deposits jump 49.8% in FY16 as its share of total deposits rose to 28.2% from just 23% in FY15.

Rana Kapoor, its managing director and chief executive officer, now expects these to cross the 40% in less than four years. "We are seeing growth quarter-on-quarter in our SA balances. Moreover, the bank has a fair amount of stored value because we are giving 6% interest to everyone. We are also seeing very good appreciation in our CA balances because our cash management solutions are getting more penetration. So, we believe that we will achieve our CASA target of 40% far sooner than our original target of March 2020," Kapoor said, after the bank had announced its results for the March quarter.

What affected the CASA growth of the 10 PSBs the most was the fact that three of them — Central Bank of India, Syndicate Bank and Indian Overseas Bank — actually saw double digit percentage drops in their CA deposits.

Interestingly, of these 16 banks, the only bank which saw its CASA ratio drop in FY16 was the bank that has always been considered as the leader of CASA - HDFC Bank.