New Delhi– Given the upturn in non-food and industrial credit as reported by the RBI, banks are expected to report higher credit growth and market share at the cost of non-banking finance companies (NBFCs) and housing finance firms, a financial services firm said on Tuesday.

Centrum Broking said in a report that with the current slowdown in the NBFC segment and non-performing assets (NPAs or bad loans) issues stabilising for banks, the latter are expected to report higher credit growth, resulting in a further boost to overall credit growth.

“According to the RBI credit data on sectoral deployment for November 2018, overall non-food credit grew 13.8 per cent YoY (year-on-year) to Rs 80.9 trillion (80 lakh crore), the highest since March 2014. This growth was again led by services and personal loans,” said the report titled “RBI sectoral credit – trajectory intact for November 2018”, authored by Aalok Shah and Gaurav Jani.

“The uptrend in industrial credit continues, reporting the highest level since February 16. On a MoM (month-on-month) basis, NBFC credit growth faced headwinds and credit to housing inched up. The momentum in agriculture credit continues.

“Given the slowdown in the NBFC segment and asset quality issues stabilising for banks, we expect banks to report higher credit growth, resulting in a further uptick in overall credit growth,” it said.

Citing Reserve Bank of India (RBI) data, the report said systemic credit growth in November was highest since March 2014, mainly led by services at 28.1 per cent (YoY) and personal loans at 17.2 per cent (YoY).

“Given the slowdown in the NBFC segment and the NPA cycle peaking, we expect overall credit growth to remain high,” the report said.

“In contrast to NBFC credit, banks’ housing credit has risen MoM. The decline in consumer durable credit continues at 81.7 per cent YoY. We expect banks to continue to gain market share, especially at the cost of NBFCs and housing finance companies.”

Giving its view on bank stocks, the report said: “We prefer banks with strong corporate franchises; in our coverage universe, we prefer State Bank of India and ICICI Bank among larger banks. Among smaller private sector lenders, we like Karnataka Bank and Federal Bank.” (IANS)