HDFC Bank Q3 FY25: Deposit Growth Outpaces Loans Amid Strategic Moves

Introduction

HDFC Bank, India’s largest private sector bank, has reported its financial performance for the quarter ending December 31, 2024. Here’s a closer look at the highlights:

1. Deposit Growth Outpaces Loans

• Deposits: ₹24.53 trillion, growing by 4.2% quarter-on-quarter (QoQ), slower than the 5.1% growth in the previous quarter.
• Loans/Advances: ₹25.43 trillion, reflecting a modest 0.9% QoQ growth compared to 1.3% in the prior quarter.

2. CASA Growth

The average Current Account and Savings Account (CASA) deposits rose by 1.1% during the quarter, highlighting steady performance in low-cost deposit mobilization.

3. Loan-to-Deposit Ratio Post-HDFC Merger

Following its merger with HDFC in July 2023, the bank’s loan-to-deposit ratio surged to 110%, creating a need to focus on deposit growth and optimize liquidity.

To address this challenge:

• HDFC Bank securitized ₹216 billion worth of loans in the December quarter.
• The move is part of its strategy to rebalance its loan-to-deposit ratio and maintain liquidity.

4. RBI-Approved Stake Acquisitions

The Reserve Bank of India (RBI) granted HDFC Bank approval to acquire up to 9.5% stakes in Kotak Mahindra Bank, AU Small Finance Bank, and Capital Small Finance Bank.

• The approval is valid until January 2, 2026.
• The bank must ensure aggregate holdings in these banks remain below 9.5% of paid-up share capital or voting rights.

5. Strategic Response Post-Merger

The merger with HDFC added a large loan book but fewer deposits, intensifying the need for deposit growth and innovative liquidity solutions.

• Retail loans were offered for sale, and strategic securitization initiatives were implemented to ease liquidity pressures.

Conclusion

HDFC Bank’s Q3 FY25 results reflect its strategic focus on balancing deposit and loan growth while addressing post-merger challenges. The emphasis on CASA growth, securitization, and RBI-approved stake acquisitions highlights its proactive approach to navigating the evolving financial landscape.

Stay updated with HDFC Bank’s latest developments to understand how India’s largest private bank continues to adapt and grow in a competitive market.