HDFC Bank, IndusInd report strong loan growth, but CASA deposits lag

economictimes.indiatimes.com:

HDFC Bank and IndusInd Bank reported a strong growth in advances, largely driven by retail loans, while growth for their smaller peers Bandhan Bank and Yes Bank was slower, preliminary business numbers released by these lenders showed. However, low-cost current and savings account deposits (CASA) for all banks slowed. Analysts are keeping a close eye on these CASA numbers to see whether they are just seasonal or have long-term implications.

HDFC Bank, the largest of the lenders to release its numbers, said its total advances increased 13% to ₹22.45 lakh crore from ₹19.85 lakh crore a year earlier. The country's largest private sector bank, which took over mortgage financing parent effective July 1, said the bank's advances on a standalone basis aggregated to ₹16.15 lakh crore as of June 30, 2023, up 15.8% from ₹13.95 lakh crore a year earlier led by a 29% growth in commercial and rural banking loans and 20% growth in retail loans. HDFC Bank's total deposits increased 19% to ₹19.13 lakh crore but the bank's CASA deposit growth was much slower at 11%.

More importantly, the bank's CASA ratio has fallen to 42.5% in June 2023 from 44.4% in March 2023. Similarly, IndusInd Bank's loan book increased 21% to ₹3.01 lakh crore in June 2023 from ₹2.47 lakh crore a year ago. The bank's deposits rose 15% but its CASA ratio dropped to 39.9% in June 2023 from 40.1% in March 2023.

Suresh Ganapathy, head financial services research at Macquarie Capital, said there could be some near-term pressure on growth as the HDFC Bank tries to integrate with its mortgage parent. «Longer term we will closely look at the combined entity's ability to deliver 18-20% gross advances growth and sustain 2% ROA,» Ganapathy said. Despite the fall in IndusInd's