On Friday, India’s largest private lender, HDFC Bank, announced that the increase in deposits surpassed loan growth in the fiscal second quarter. The Mumbai-based bank reported a 1.3% rise in gross advances, or loans sanctioned and disbursed, reaching Rs 25.19 trillion ($300 billion) for the quarter ending in September, following a 0.8% decline in the previous quarter.
HDFC Bank stated that retail loans increased by approximately Rs 33,800 crore, while commercial and rural banking loans rose by around Rs 38,000 crore compared to the previous quarter. However, corporate and other wholesale loans decreased by Rs 13,300 crore from the prior quarter.
Deposits increased by 5.1% from the previous quarter, reaching Rs 25 trillion, following no sequential change in the April-June period. The total low-cost current account and savings account deposits grew by 2.3%.
In July 2023, HDFC Bank merged with its parent company, HDFC, which significantly increased its loan portfolio but added a comparatively smaller amount of deposits. Consequently, the bank’s loan-to-deposit ratio (LDR) rose to approximately 110% post-merger, creating pressure to either accelerate deposit growth or slow down loan expansion. The LDR is a metric banks use to evaluate their liquidity position by determining if they have sufficient deposits to support loan growth.
HDFC Bank had said in July that it aimed to bring down the LDR in the coming quarters as deposits would grow faster than loans.
In the September-quarter, the bank securitised Rs 19,200 crore of loans as a strategic initiative, it said. For the year, the bank has securitised loans worth Rs 24,600 crore.