HDFC Bank Reports Increased Credit Growth Amid Slower Deposit Mobilization
HDFC Bank's Financial Performance in Q1
Photo: @InvGurInd/X
Mumbai, April 4: On Saturday, HDFC Bank disclosed a growing disparity between its credit and deposit growth for the March quarter, with robust loan growth significantly outpacing the slower pace of deposit accumulation, resulting in a high credit-deposit ratio.
The bank's gross advances surged by approximately 17% year-on-year (YoY), reaching nearly Rs 25 lakh crore as of March 31, compared to around Rs 21.4 lakh crore the previous year, as per an exchange announcement.
Sequentially, loan growth was moderate, primarily driven by retail and SME sectors, while corporate lending was approached cautiously. Retail loans were the main contributors to new disbursements during this quarter.
On the liabilities front, total deposits amounted to about Rs 23.5 lakh crore, an increase from roughly Rs 20.5 lakh crore a year prior.
However, the growth rate of deposits fell short of that of credit, maintaining the credit-deposit ratio at approximately 106–108%.
The bank also experienced some strain on low-cost deposits, with CASA deposits increasing at a slower rate, resulting in a slight drop in the CASA ratio to around 37–38% from 38–39% in the previous quarter.
This reflects ongoing difficulties in attracting cheaper funds amid tight liquidity conditions.
In a separate announcement on March 24, the bank indicated that its Board of Directors would convene on April 18 to approve the audited financial results for the quarter and the full financial year ending March 31.
The board will also deliberate on a potential dividend for FY26 and establish the record date for it.
Looking forward, analysts suggest that crucial aspects to monitor will include the bank's capacity to boost deposit growth, enhance CASA performance, and sustain stable margins.
Additionally, the bank is navigating governance-related issues. Sources have indicated that it does not intend to pursue legal action against former non-executive chairman Atanu Chakraborty following his resignation in March.
Instead, the bank is concentrating on reinforcing internal processes, especially regarding third-party sales practices.
Disciplinary measures have already been taken concerning the alleged mis-selling of AT-1 bonds in 2018-19, which included the suspension of three senior executives and penalties for 12 other employees.