HDFC Bank, IndusInd Bank and Federal Bank have released select metrics of the first quarter of FY21, a period written off by many as a washout.

Strict lockdowns amid a stubbornly steep coronavirus infection curve has resulted in a 1.08% contraction of the banking sector’s loan book in the first quarter, according to data from the Reserve Bank of India. Private sector banks such as IndusInd Bank and Federal Bank have reflected the contraction of the system and reported a 3.09% and 0.89% sequential contraction in their loan books.

However, the country’s largest private sector lender, HDFC Bank, reported a 1.09% growth in loan offtake. Needless to say, analysts point out to the bank’s strong franchise as well as its proven historic record of belying the broad trends in growth. Moreover, this loan growth comes despite a smaller home loan purchase from HDFC Ltd. The bank bought 1,380 crore worth of home loans from its parent against 7,230 crore bought a year ago.

HDFC Bank has managed to find growth despite challenges in mobility amid the pandemic. However, it would be interesting to see which segments the loan growth has come from. The lender has also been able to maintain loan growth in the double digits on a year-on-year basis.

Meanwhile, IndusInd Bank showed the pain of the pandemic as its loan book shrank during the quarter. Its loan growth has decelerated sharply on a year-on-year basis too. Federal Bank showed a similar trend.

It is clear that private banks will see a truncated loan growth this year with the first half showing dismal numbers. But among private banks, some lenders may see more pain than others simply because they entered the pandemic on a weaker note.

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