PSU Banks: Loan Growth Outpaces Deposit Growth in Q1

India's public-sector banks opened the first quarter of FY27 with double-digit loan growth. Deposit increases fell short of the lending pace.

Nine of 12 state-owned lenders reported provisional numbers for the three months through June. Advances rose 12% to nearly 29% from a year earlier. Deposit growth ranged from 3.5% to 16%.

Bank of Baroda's global advances climbed 17.4% year-on-year, while deposits grew 13.8%. At Punjab National Bank, loans rose 12.85% and deposits 8.5%. Central Bank of India reported the fastest expansion in the group. Its advances jumped 28.8% against an 11.7% rise in deposits.

The disclosures showed that retail and agricultural lending drove the expansion. MSME loans also contributed. Canara Bank posted a 21.3% rise in domestic RAM advances, followed by Bank of India at 19.7% and Bank of Baroda at 18.5%.

The faster loan growth relative to deposits pushed credit-deposit ratios higher. Punjab National Bank's global CD ratio rose to 73.92% from 71.1% a year ago. UCO Bank's ratio jumped to 82.15% from 75.38%. Union Bank's domestic ratio topped 83.38%.

Low-cost current and savings account deposits stayed under pressure. Union Bank's CASA ratio slipped to 35.10% from 35.51%. Central Bank of India's ratio fell to 46.61% from 46.88%. Indian Bank's domestic CASA ratio eased to 39.64% from 39.67% at the end of March.

Three of the 12 state-owned lenders have yet to report their Q1 numbers. Their disclosures will complete the sector picture.