Table of Contents
Anatomy of the slowdown and what can change.......................... 4
Slowdown exaggerated by retail...............................................................................................4
Corporate loan growth: don’t expect too much from the industrial pick up..............................5
Deflationary conditions, aggravating the slowdown, could partially reverse ............................8
Structural, longer-term issues with credit growth....................... 10
Twelve-year cycle study: reversal due, but tardier ..................................................................10
Crowding-out also responsible for subdued private credit......................................................11
Challenging phase for the ‘credit multiplier’............................................................................12
Near-term outlook not benign........................................................ 14
Scenario analysis of loan growth for the next one year ..........................................................14
Competition from external commercial borrowings can intensify...........................................16
Impact on financials and valuations .............................................. 18
Loan growth an important but not unqualified value driver.....................................................18
Sensitivity: growth acceleration helps, but has its risks too....................................................20
Internal corporate lending survey results ..................................... 23
Annexure 1: Supplementary tables and charts............................. 26
Deceleration real, not just a base effect issue ........................................................................26
Belief that low rates will spur loan growth erroneous.............................................................27