Bank lending has grown faster than deposits for six straight quarters. To close the gap, lenders are paying more for bulk deposits and raising money through certificates of deposit.
Margins are taking the hit
Net interest margins narrowed at four of the six largest private banks in the September quarter. Mid-sized lenders, which depend more on bulk money, saw the sharpest squeeze.
Bad loans stay low
Asset quality held up. Gross bad loans were below 2.3% at all six large banks in our scorecard.