PSU Banks Begin FY27 With Strong Loan Growth; Deposits Trail

Public sector banks started the first quarter of FY27 on a strong footing, reporting double-digit growth in advances, but deposit mobilisation seemed to be trailing the jump in loans.

Retail loans remained the key growth engine even as low-cost CASA deposits stayed under pressure.

Provisional business disclosures, compiled by PTI, by nine of the 12 state-owned lenders for the quarter ended June 30, showed loan growth ranging from around 12 % to nearly 29 % year-on-year compared to deposit growth of 3.5-16 %, reflecting sustained credit demand despite a slower pace of liability mobilisation.

Among the major lenders, Bank of Baroda reported a 17.4 % year-on-year rise in global advances against a 13.8 % increase in deposits, while Bank of India posted 18.64 % loan growth and a 14.92 % rise in deposits.

Punjab National Bank's advances grew 12.85 % year-on-year compared to an 8.5 % increase in deposits.

Canara Bank reported 18 % growth in loans and an 11.7 % rise in deposits, while Indian Bank recorded 13.9 % loan growth and a 13.3 % jump in deposits.

Central Bank of India emerged as the fastest-growing lender in the group, with advances rising 28.8 % year-on-year against an 11.7 % expansion in deposits.

UCO Bank reported a 21.3 % rise in advances and an 11 % increase in deposits, and Punjab & Sind Bank posted 19.5 % loan growth and a 12.2 % rise in deposits.

Union Bank of India stood out for relatively weak deposit mobilisation, with the component growing just 3.5 % year-on-year, even as advances increased 12.5 %.

Retail, agriculture and MSME (RAM) loans continued to drive credit expansion across lenders.

Canara Bank reported the highest growth among peers, with domestic RAM advances rising 21.3 % year-on-year, followed by Bank of India at 19.7 % and Bank of Baroda at 18.5 %. Indian Bank's RAM portfolio grew 14.8 %, while Union Bank's expanded 11.56 %.

The faster pace of lending compared to deposit growth also resulted in a further rise in credit-deposit ratios at several lenders.

Punjab National Bank's global credit-deposit ratio improved to 73.92 % from 71.1 % a year earlier, while UCO Bank's ratio rose to 82.15 % from 75.38 %.

Union Bank's domestic credit-deposit ratio also increased sharply to over 83.38 %.

Meanwhile, the pressure on low-cost deposits persisted. Union Bank's CASA ratio declined marginally to 35.10 % from 35.51 % a year ago, while Central Bank of India's CASA ratio fell to 46.61 % from 46.88 %.

Indian Bank's domestic CASA ratio also eased to 39.64 % from 39.67 % at the end of March.