HDFC Bank Q1 Update: Gross Advances Shrink 0.8% QoQ, Deposit Growth Flat
HDFC Bank Ltd.'s gross advances declined 0.8% quarter-on-quarter to Rs 24.87 lakh crore in the April–June quarter, the bank said in an exchange filing on Thursday.
The private lender's deposit growth remained flat at Rs 2.37 lakh crore on a quarterly basis during the reporting quarter. HDFC Bank's current account-savings account deposits fell 5% on a sequential basis to Rs 8.63 lakh crore during the first quarter of the ongoing financial year.
Year-on-year numbers are not comparable as the bank concluded its mega merger with Housing Development Finance Corp. on July 1, 2023.
Owing to the merger, the bank's credit-deposit ratio, popularly known as CD ratio, is around 105%. This indicates that the bank's deposit growth is lagging loan growth. The CD ratio measures how much a bank lends out of the deposits it has mobilised.
A higher credit-deposit ratio hinders the banks to grow, as banks need to maintain a 100% liquidity coverage ratio as mandated by the Reserve Bank of India.
The average liquidity coverage ratio for the bank was around 123% for the June quarter.
While announcing the March quarter results in April, Chief Financial Officer Srinivasan Vaidyanathan said that the bank will remain focused on ensuring deposit accretion, without cutting pricing on loans. However, he declined to give any guidance on margin during this fiscal.
"Our deposit strategy has remained intact," Vaidyanathan had said.
HDFC Bank saw Rs 1.6 lakh crore increase in total deposits during the January-March period. Of this, Rs 1.3 lakh crore came from retail deposits. As of March 31, 84% of the bank's total deposits are retail in nature, the bank's CFO said.
During the June quarter, retail loans grew by around Rs 18,600 crore, and commercial and rural banking loans rose by around Rs 7,200 crore, the bank said in the filing. Corporate and other wholesale loans fell by Rs 26,600 crore from the previous quarter, it showed.
Shares of HDFC Bank closed 0.5% lower at Rs 1,759 apiece, as compared to 0.47% gains in the country's benchmark NSE Nifty 50.
Of the 50 analysts tracking the lender by Bloomberg, 45 maintain a "buy" and five recommend "hold". The average of 12-month analyst price targets implies a return potential of 8.2%.
According to Bloomberg, the bank is expected to report a net profit of Rs 15,595.34 crore during the June quarter, as compared with Rs 16,512 crore in the previous quarter.
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