Banks’ CASA share slip up to 700 bps in FY24
The slip is despite the fact deposit rates remained elevated through FY24.
The share of current account (CA) and saving account (SA) deposits as a share of total deposits fell for most banks during FY24 amid intensied pressure for retail deposit mobilisation and increased reliance on term and bulk deposits.
The CASA ratio, or the share of low-cost CASA deposits, declined by 40-730 bps year-on-year (y-o-y) for banks that have declared the Q4 FY24 earnings so far. This is despite the fact deposit rates remained elevated through FY24, owing to tight liquidity conditions and sustained demand for credit, especially retail and unsecured loans.
Banks are currently oering rates of up to 7% on certain high value savings accounts of more than ₹2 lakh and up to 7.5% on saving account balances between ₹5-10 lakh. Rates oered by some small nance banks are even higher.
The decline was much faster in the rst half of the nancial year as banks witnessed a shift in investor behaviour to higher-yielding term deposits and other investment avenues. However, most large banks such as ICICI Bank and Axis Bank managed to recoup at least some of the lost share in the second half. As of December 2023, CASA ratios of private banks were 393 bps lower y-o-y and 57 bps quarter-on-quarter (q-o-q) at 38.7%, and those for PSU banks, it declined 187 bps y-o-y and 25 bps q-o-q at 38.5%, weighing on lenders’ margins. Smaller banks such as South Indian Bank saw steady CASA ratios led by conscious slowing in the loan book given stretched loan-to-deposit ratios (LDR).
(The writer is with The Hindu businessline)