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BFSI Business update - “Deposits growth rebounds; Balance sheet turns more favorable”

ICICIdirect Research 09 Oct 2026 DISCLAIMER

Deposits played catch-up in Q2FY27, emerging as the key highlight of provisional business updates, while credit growth sustained its already-strong momentum.
As per our tracking universe, Private banks were particularly balanced, with advances/deposits growing ~19%/~19.5% YoY, while PSU banks reported ~18.8%/~17% growth, respectively. The improvement in liability mobilization has helped ease funding pressures and brought greater balance to bank’s balance-sheet growth.
The improvement was also visible sequentially, with several banks seeing deposits either outpace or broadly keep pace with credit, helping stabilise or improve CD ratios.
BoB, Bank of India, South Indian Bank and Kotak Mahindra Bank stood out on this front, while large private banks also benefited from sizeable FCNR(B) mobilization, which provided additional liquidity and balance-sheet headroom for further credit growth.
However, the stronger deposit growth came with a weaker mix in several cases. Incremental mobilisation was tilted towards term deposits, including FCNR(B), resulting in CASA ratio moderation across names such as HDFC Bank, Kotak, Axis, South Indian Bank and IndusInd Bank which can keep margins under pressure. Overall, Q2 shifts the focus from simply sustaining credit growth to funding that growth efficiently, with liability mobilisation improving meaningfully but CASA dilution resulting in marginal pressure on margins

Q2FY27 provisional data

Advances
(in ₹ crore)

YoY
(%)

QoQ
(%)

 

Deposits
(in ₹ crore)

YoY
(%)

QoQ
(%)

CASA ratio
(%)

CD

IDFC First Bank

338,749

29.9%

13.7%

 

348,582

25.9%

11.8%

51.3%

97.2%

Kotak Bank

577,094

24.7%

12.7%

 

651,491

23.2%

13.7%

38.2%

88.6%

IndusInd Bank

362,393

11.2%

11.1%

 

429,038

10.1%

3.4%

28.0%

84.5%

Axis Bank

1,384,600

22.7%

8.8%

 

1,452,100

20.7%

5.8%

36.5%

95.4%

Bank of Baroda

1,512,435

18.3%

6.7%

 

1,751,262

16.8%

7.2%

NA

86.4%

Indian Bank

723,000

16.6%

5.5%

 

873,000

12.4%

3.4%

39.3%

82.8%

HDFC Bank

3,219,500

16.3%

5.2%

 

3,327,500

18.8%

4.9%

31.6%

96.8%

South Indian Bank

109,519

18.7%

4.9%

 

137,258

18.7%

9.1%

31.6%

79.8%

CSB Bank

42,373

22.0%

3.7%

 

46,889

18.0%

3.2%

19.0%

90.4%

Bank of India

854,045

20.4%

7.1%

 

1,037,618

21.6%

8.3%

 NA

82.3%

 

“NBFC business momentum remains steady, microfinance recovery continues”

  • Q2FY27 provisional updates indicate sustained credit growth across NBFCs, with diversified lenders benefiting from healthy urban demand and gold finance, while microfinance lenders continue to recover through stronger collections and improving asset quality.
  • Among diversified NBFCs, L&T Finance continued to execute its retailisation strategy, with urban and gold finance supporting growth despite softer rural business finance. Bajaj Finance sustained healthy AUM growth despite slower growth in new loan bookings, with festive demand shifting into Q3FY27.
  • Microfinance trends remained encouraging although regional stress from deficient rainfall and flooding remains a risk, with CreditAccess Grameen reporting sustained disbursement recovery alongside improvement in delinquency buckets. Muthoot Microfin’s collection efficiency improved to 98.1%, while cost of funds fell below 10%, supporting profitability; the rising non-JLG portfolio also indicates progress towards diversification.

Q2FY27 provisional data    

Advances

(in ₹ crore) 

YoY

(%) 

QoQ

(%) 

Bajaj Finance

5,84,750

26.5%

6.9%

Bajaj Housing Finance

1,58,190

25.0%

5.7%

L&T Finance (Retail book)

1,34,500

29.0%

5.5%

Credit Access Gramin

30,946

19.5%

2.1%

Muthoot Microfin

15,323

22.0%

5.9%

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