HDFC Bank says its loans will grow slower than deposits
HDFC Bank on Thursday said that going forward its advances will grow slower than its deposits, as it adjusts to its merger with parent HDFC limited. In his annual address to shareholders, managing director Sashidhar Jagdishan said that the bank will work towards bringing down its credit to deposit ratio, look at prepaying HDFCs borrowings and explore profitable lending sources.
“During this time of adjustment, the bank would grow its advances a little slower than the deposit growth,” Sashidhar Jagdishan, MD, HDFC Bank said in his annual address. His speech was published as part of the annual report. “We will avoid pursuing growth which does not meet our risk adjusted profitability thresholds.”
Jagdishan also said that the bank is working towards bringing down its CD ratio. The credit to deposit ratio of the lender had touched 110%. Prior to the merger the private lender has maintained CD ratio in the range of 85-87%.
“It is our endeavour to bring down the credit to deposit ratio to pre-merger levels and our focus would be to maintain adequate liquidity buffers, repayment of eHDFC borrowings as and when they mature, including weighing any prepayment opportunities that may arise, and pursuing profitable sources of lending,” Jagdishan said.
Reserve Bank of India Shaktikanta Das had recently cautioned banks against exuberance in lending.
«The persisting gap between credit and deposit growth rates warrants a rethink by the boards of banks to re-strategise their business plans. A prudent balance between assets and
