HDFC Bank has cut its savings rate by 25 bps, though savings growth has been muted (at 4–5%/0–4% YoY/QoQ in the last two quarters). Yields on advances should see a full impact of the policy rate cut in upcoming quarters. While cost of deposits should ease, it is unlikely to offset the pressure on yields; thus, pressure on NIM is likely in H1 FY26 but continued substitution of high-cost borrowing and favorable mix should help cushion FY26 NIM (<10bps decline YoY).
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ICICI Securities Report
HDFC Bank Ltd. reported Q4 FY25 PAT of Rs 176 billion (RoA steady at ~1.9%) led by stable core net interest margin QoQ and contained opex. Deposits growth (14% YoY) remains driven by term deposits (20% YoY) while CA grew 18% QoQ (up 1% YoY) due to seasonality.
Reported NIM (up 11bps to 3.73%) was aided by Rs 7 billion of interest on IT refund while asset quality was stable. Adjusted for IT refund, NII growth was reasonable at ~3% QoQ (up 8% YoY), as against loan growth of 4% QoQ (up 5% YoY).
Core NIM is broadly stable at ~3.65%, though could have been favourably impacted by strong CA jump and lower agri slippages. Opex growth (7% YoY on adjusted basis) remains calibrated and continues to offer cushion against moderating revenue growth.
Adjusted core pre-provision operating profit growth was reasonable at ~5% QoQ (10% YoY). Liquidity coverage ratio dipped to 119% (versus 125% QoQ).
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