HDFC merger helps boost credit offtake to 19.7 per cent in fortnight ended Jul 28: Report

economictimes.indiatimes.com:

HDFC Bank has pushed credit offtake by an incremental 500 basis points to 19.7 per cent for the fortnight to July 28, excluding which the system-wide lending growth was only 14.7 per cent on-year, according to a report. The largest pure-play mortgage lender HDFC merged with its own banking subsidiary on July 1 in a record USD 40 billion all stocks merger, creating a banking behemoth with a balance sheet of over Rs 23 lakh crore. Credit offtake continued to show robust growth, increasing by 19.7 per cent on-year to reach Rs 148 lakh crore for the fortnight to July 28.

This was primarily driven by the impact of the HDFC-HDFC Bank merger as well as growth in personal loans and loans to NBFCs, Care Ratings said in the report. If the merger impact is excluded, credit grew at a lower 14.7 per cent on-year for the fortnight, it noted. Deposits too witnessed healthy growth, increasing by 12.9 per cent for the fortnight, including the merger impact.

Growth has not been at the same pace as credit since the larger proportion of liabilities of HDFC was by way of borrowings rather than just deposits, Care Ratings said and maintained a positive outlook for credit offtake at 13-13.5 per cent for the full year, excluding the merger impact. On the other hand, deposit growth is expected to improve going forward as banks look to shore up their liability franchise and ensure that deposit growth does not constrain the credit offtake. Credit demand increased by 19.7 per cent on-year and a sequential improvement of 0.3 per cent for the fortnight to July 28.