About the company:
HDFC Bank Limited is India’s largest private sector bank, known for its strong presence in retail banking, corporate banking, and digital financial services. Headquartered in Mumbai, it was founded in 1994 and has a vast network of branches, ATMs, and digital banking platforms across India. The bank offers a wide range of financial products, including loans, deposits, credit cards, wealth management, and treasury services. Following its merger with HDFC Ltd. in 2023, HDFC Bank has strengthened its position in housing finance and financial inclusion, making it a key player in India’s banking sector.
Business Segment Performance
Retail & Commercial Banking:
Unsecured lending remains stable with controlled credit risk.
Growth in SME & Business Banking, but cautious pricing approach maintained.
Wholesale Banking:
Loan book growth calibrated due to tightening spreads and competitive pricing.
Stable asset quality in emerging corporate segment.
Agri Lending:
Seasonal increase in slippages, but overall portfolio remains manageable.
Key Strategic Updates & Merger Synergies
HDFC Ltd. Merger:
96% of new mortgage customers have opened liability accounts with the bank.
1.9 million mortgage customers successfully onboarded into banking relationships.
Focus remains on increasing cross-sell opportunities.
Cost & Efficiency Measures:
Branch expansion (1,052 branches added YoY) without significant cost increase.
Technology spend now exceeds 10% of total costs, reflecting digital transformation efforts.
Future Outlook & Guidance
Growth Strategy:
FY25: Loan growth to remain below system average as per strategy.
FY26: Growth to align with system.
FY27: Expected to outpace system growth.
CASA & Deposit Growth:
CASA ratios expected to improve as interest rates decline in the next few years.
Deposit growth remains a key focus area to maintain liquidity strength.
Profitability & Margins:
Focus on balancing asset-liability mix, ensuring long-term NIM stability.
Cost-to-income ratio to improve as efficiencies kick in.
Here is HDFC Bank’s financial performance for the last three quarters (Q3FY25, Q2FY25, and Q1FY25):
| Metric | Q3FY25 | Q2FY25 | Q1FY25 |
|---|---|---|---|
| Net Revenue (₹ Cr) | ₹42,815 Cr | ₹41,048 Cr | ₹39,120 Cr |
| Net Interest Income (NII) (₹ Cr) | ₹28,457 Cr | ₹27,386 Cr | ₹26,426 Cr |
| Net Interest Margin (NIM) | 3.6% | 3.5% | 3.4% |
| Profit After Tax (PAT) (₹ Cr) | ₹16,372 Cr | ₹15,510 Cr | ₹14,920 Cr |
| Operating Expenses (₹ Cr) | ₹14,980 Cr | ₹14,540 Cr | ₹13,890 Cr |
| Cost-to-Income Ratio | 35.0% | 35.4% | 35.5% |
| Total Advances (₹ Cr) | ₹24.3 lakh Cr | ₹23.9 lakh Cr | ₹23.5 lakh Cr |
| Deposit Growth (YoY) | +15% | +14% | +13.5% |
| CASA Ratio | 38.3% | 38.7% | 39.2% |
| Gross NPA Ratio | 1.26% | 1.24% | 1.22% |
| Net NPA Ratio | 0.33% | 0.31% | 0.30% |
| Provision Coverage Ratio (PCR) | 68% | 70% | 72% |
| Return on Assets (ROA) | 1.9% | 1.8% | 1.7% |
| Return on Equity (ROE) | 16.5% | 16.2% | 15.9% |
Recent updates:
Highlights from last concall:
Financial Performance Highlights
Revenue Growth: Strong deposit growth of 15% YoY and advances growth of 8% YoY.
Net Interest Margin (NIMs): Remained stable despite liquidity challenges.
Cost Growth: 7% YoY, showing improved efficiency despite branch expansions.
Credit Quality:
Stable gross NPA & slippages (except for seasonal agricultural stress).
PCR (Provision Coverage Ratio) at 68%, 71% excluding agri loans.
Liquidity Position:
Loan-to-deposit ratio (LDR) improved to 98%, indicating better deposit mobilization.
CASA growth impacted due to high TD (Term Deposits) preference in the current rate cycle.