MUMBAI: HDFC Bank‘s deposit base surpassed its advances for the first time after the merger of its parent housing finance company with the bank in July 2023. The country’s largest private bank disclosed its business figures for Q3 FY25 in a filing with the stock exchanges.
The bank’s advances growth has slowed as part of its strategy, though this is expected to pressure margins since fewer incremental deposits are being deployed as loans. Additionally, most deposit growth during the quarter came from term deposits while the decline in advances was because of a 10% drop in the bank’s corporate loan book.
HDFC Bank’s deposits stood at Rs 25.6 lakh crore as of Dec 31, 2024, marking a growth of 15.8% from Rs 22.1 lakh crore on Dec 31, 2023, and 2.5% from Rs 25 lakh crore on Sept 30, 2024. Gross advances were Rs 25.4 lakh crore, reflecting a 3% increase from Rs 24.7 lakh crore on Dec 31, 2023.
At the industry level, bank credit and deposits have grown at around 11.5% year-on-year until mid-Dec. While HDFC Bank’s deposit growth is outpacing the system, its advances are growing slower.
The slower advances growth aligns with the bank’s strategy, as outlined by MD & CEO Sashidhar Jagdishan in the Q2 FY25 earnings call. “We will bring down the credit-deposit ratio faster than what we had anticipated in the past. FY25, we would probably grow slower than the system. FY26, we may be at or around the system growth rate. FY27, we should be faster than the system growth rate,” he said.
Although the bank has seen robust deposit growth, the additional funds have come at a cost. Its term deposits rose to Rs 16.9 lakh crore as of Dec 31, 2024, up 22.7% from Rs 13.8 lakh crore on Dec 31, 2023, and 4.6% from Rs 16.2 lakh crore on Sept 30, 2024.
“As we have witnessed in previous high interest rate cycles, customer preferences continue to be towards time deposits, probably to lock in at higher rates,” Jagdishan said after the Q2 FY25 results.
The bank’s period-end advances under management stood at Rs 26.8 lakh crore as of Dec 31, 2024, reflecting a growth of 6.1% from Rs 25.3 lakh crore on Dec 31, 2023, and 1.9% from Rs 26.3 lakh crore on Sept 30, 2024. On a year-on-year basis, retail loans grew by 10%, while commercial and rural banking loans increased by 11.5%. However, corporate and other wholesale loans declined by 10.3% compared to Dec 31, 2023.
