HDFC Bank’s CASA ratio falls; credit, deposit growth robust

livemint.com:

MUMBAI : HDFC Bank reported a slowdown in low-cost deposits in the second quarter even as the deposit and advances book continued to show strong growth, as per the pre-quarter update of the bank released on Wednesday. This is the first quarter after the merger of HDFC with the bank. The private sector lender’s current and savings account ratio (CASA) was 37.6% as of 30 September 2023 compared to 42.5% as of 30 June 2023.

Deposit book for the merged entity however grew at 18.8% year on year (yoy) to ₹2.17 trillion as of 30 September 2023. On a sequential basis, the bank’s deposit book grew 5.3%. “They (bank) has raised ₹1.1 trillion in a quarter when they have gone through the merger and would have been busy integrating.

If we assume ₹1.1 trillion in 3Q and say ₹1.5 trillion in 4Q—they will land up ending FY24 with ₹4 trillion deposits – their stated target – that should be say around 18-20% incremental market share…That is a commendable achievement in case they are able to sustain the current momentum," said Suresh Ganapathy, head of financial services research, Macquarie Capital. According to the update, HDFC Bank’s merged loan book saw a 17.6% year on year growth to ₹23.5 trillion as of September end and 5.5% sequential growth. The growth in loan book was on account of merger.

The domestic retail loans rose 112% year-on-year, while commercial and rural banking loans grew by 30%. Corporate and other wholesale loans saw the slowest growth of around 8%. “Business growth number looks better than expected.

deposit growth being stronger could add to the margin pressure in Q2. However, we believe that the bank will see a bottoming of margins in Q2," said Anand Dama, banking analyst, Emkay Global Financial Services. HDFC