HDFC Bank’s Q3 FY25 business update reveals slower-than-expected growth in deposits and advances, missing both IIFL and consensus estimates. The bank’s Loan-to-Deposit Ratio (LDR) also declined below the 100% mark, raising concerns about business momentum.
Key Highlights:
Performance vs Expectations
- Loans: 0.7% below IIFL estimates and 2.3% below consensus.
- Deposits: ~1.4% below IIFL estimates and ~2.3% below consensus.
Advances and Deposits
- Gross Advances:
- Grew 0.9% QoQ and ~3% YoY.
- Including IBPC and discounted bills, advances rose 1.9% QoQ.
- Quarterly average grossed-up advances increased 2.5% QoQ.
- Deposits:
- Total deposits grew 2.5% QoQ and 15.8% YoY, lagging system deposit growth of ~11.5% YoY as of December 13, 2024.
- Quarterly average deposits rose 4.2% QoQ.
Segment-Wise Growth
- Retail Loans: Up 10.0% YoY.
- Commercial & Rural Banking (CRB): Increased by 11.5% YoY.
- Corporate and Wholesale Loans: Declined by 10.3% YoY, which is expected to support Net Interest Margins (NIMs) in Q3.
CASA and LDR Trends
- CASA Deposits: De-grew 1.2% QoQ but grew 4.4% YoY. Quarterly average CASA deposits grew by 1.1% QoQ and 6.0% YoY.
- CASA Ratio: Declined 130 bps QoQ to 34.0%.
- LDR: Eased by 158 bps to 99.2%, dropping below 100%.
Strategic Updates
- The bank securitized/assigned loans worth ₹21,600 crore during Q3 FY25, taking the YTD total to ₹46,300 crore.
Analyst Observations:
HDFC Bank’s business momentum in Q3 FY25 fell short of expectations, particularly in deposit accretion and CASA growth. While retail and CRB loans exhibited strong growth, corporate and wholesale loans continued to contract. The dip in LDR below 100% signals a cautious outlook on liquidity management.
TOPICS:
HDFC Bank