Banking Sector Check - Rise In Outstanding WADTDR Ahead Of Rise In Outstanding WALR: ICICI Securities

ICICI Securities Report

Monthly data on lending and deposit rates of scheduled commercial banks (excluding regional rural banks and small finance banks) for July 2023 suggests:

1. scheduled commercial banks’ weighted average lending rate on outstanding as well as fresh loans inched up in July 2023;

2. outstanding weighted average domestic term deposit rates continues its upward movement, thereby resulting in spread compression;

3. rise in outstanding WADTDR (7-8 basis points month-on-month) is much higher than the rise in outstanding WALR (up 1-2 bps month-on-month);

4. fresh WADTDR has been range-bound at 6.32- 6.36% for the past four months and is clearly much below the March 2023 high of 6.48%;

5. median one-year marginal cost of fund based lending rate for both public sector banks and private banks remains unchanged for the last two months.

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