For the first time since its merger in July 2023, HDFC Bank surpassed advances previously led by its parent housing finance company. The private sector banking giant disclosed its Q3 FY25 performance in a filing with the stock exchange, revealing strategic adjustments in its growth trajectory.
HDFC Bank reported a robust increase in deposits, reaching ₹25.6 lakh crore as of December 31, 2024, a 15.8% rise compared to ₹22.1 lakh crore on December 31, 2023, and a 2.5% growth from ₹25 lakh crore on September 30, 2024. However, advances grew at a slower pace of 3%, from ₹24.7 lakh crore to ₹25.4 lakh crore year-on-year.
The bank’s deposits and credit surged by 11.5%, with time deposits seeing a significant rise as customers sought to lock in higher rates during a high-interest cycle.
HDFC Bank has deliberately decelerated its advances growth, citing a strategic plan to reduce its credit-deposit ratio and align future growth with market trends. Corporate loans fell by 10.3%, contributing to a decline in the corporate loan book. However, commercial and rural banking loans grew by 11.5%, and retail loans increased by 10% year-on-year.
“We will bring down the credit-deposit ratio faster than anticipated. In FY25, we expect slower growth than the system. By FY26, we aim to match system growth rates, and by FY27, we should outpace them,” said Sashidhar Jagdishan, HDFC Bank’s MD & CEO.
The increased funding comes at a higher cost, even amid vigorous deposit growth. The bank noted a 22.7% year-on-year rise in deposits, from ₹13.8 lakh crore on December 31, 2023, to ₹16.9 lakh crore in December 2024. Quarter-on-quarter, deposits grew by 4.6% from ₹16.2 lakh crore on September 30, 2024.
Jagdishan acknowledged that high-interest rate cycles have driven customers to prioritise time deposits, which impacts margins.
Total advances expanded by 6.1% year-on-year to ₹26.8 lakh crore by December 31, 2024, up from ₹25.3 lakh crore. While advances exhibited growth in retail and rural banking, the bank’s overall loan book faced challenges due to reduced corporate lending.
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