V Vaidyanathan, Retail Head Of ICICI Bank says that they do not see interest rates coming down in the near-term as the RBI is still signalling a tight monetary policy. But he also added that they will not move up either and will most likely stay steady. They also do not see any impact on bank margins going ahead. They see 20% growth in advances for FY08 vs 28% last year. Overall the demand has been sluggish he says.
"There is no doubt that across the board there is reduction in consumer demand. The auto market is growing at 20% last year, its now growing at maybe 12-13%; the two-wheeler market has growing at 15% now its growing negative 13%, the heavy commercial market was growing at maybe 30% last year now its negative 13% this year so there is no doubt that the interest rates have had a role to play in the reduction of consumer demand," he said.
The IIP numbers may not trigger a rate cut, and the RBI is still concerned about inflation, Vaidyanathan says. The higher interest rates have affected the lower range of 2-wheelers, and cars more. The upper-end consumer durables are not impacted much, while the lower-end will be. Vaidyanathan feels that the growth of balance sheets for banks may get affeced due to loan de-growth. He expects 20% loan growth for banks in FY08.
The bank is also seeing good growth in deposits. "The deposit growth is coming along well, the interest rates for about 390 days is about 9.5%, for 590 days is again 9.5% and 890 days is 9.5%, it's a flat curve across. But since the interest rates are high the deposits is growing much faster in fact the current account and the saving account for the banking system as a whole and for ICICI Bank is growing well."
"There is no doubt that across the board there is reduction in consumer demand. The auto market is growing at 20% last year, its now growing at maybe 12-13%; the two-wheeler market has growing at 15% now its growing negative 13%, the heavy commercial market was growing at maybe 30% last year now its negative 13% this year so there is no doubt that the interest rates have had a role to play in the reduction of consumer demand," he said.
The IIP numbers may not trigger a rate cut, and the RBI is still concerned about inflation, Vaidyanathan says. The higher interest rates have affected the lower range of 2-wheelers, and cars more. The upper-end consumer durables are not impacted much, while the lower-end will be. Vaidyanathan feels that the growth of balance sheets for banks may get affeced due to loan de-growth. He expects 20% loan growth for banks in FY08.
The bank is also seeing good growth in deposits. "The deposit growth is coming along well, the interest rates for about 390 days is about 9.5%, for 590 days is again 9.5% and 890 days is 9.5%, it's a flat curve across. But since the interest rates are high the deposits is growing much faster in fact the current account and the saving account for the banking system as a whole and for ICICI Bank is growing well."
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