HDFC Bank Plans Slower Loan Growth as CD Ratio Targets Accelerate
HDFC Bank, the largest private sector lender in India, said it would slow the growth of its loan book in FY25 to focus on reducing its loan-to-deposit ratio (CD) growth post-merger. According to bank chief Sashidhar Jagdishan, credit growth this year will lag behind the sector, but the CD ratio will fall faster than expected, returning to 27 before consolidation in FY27.
“With loan growth slowing and deposit growth strong, we now aim to achieve this in 2-3 years,” said CFO Srinivasan Vaidyanathan, echoing an initial forecast of 4-3 years. 5 window to reduce our CD ratio
15% year-on-year (YoY) growth in deposits helped push the bank’s CD ratio down to nearly 100% in the second quarter, from a post-merger rate of 110% but loan growth of 7 per cent % YoY due just less towards HDFC Bank fixed discounts and corporate and retail loans. The bank’s leadership may have committed to bringing the CD ratio back to its pre-merger level of 87% to position the bank for robust growth in a changing credit environment
The bank continues to focus on specific sectors despite slow growth in lending. We are fully committed to the mortgage industry as it improves customer interaction. However, we have slowed down the growth in non-rent commercial real estate due to price constraints and credit characteristics,” Jagdishan continued.
HDFC Bank’s Q2 profit rose 5% year-on-year to Rs 16,821 crore, while its net profit margin (NII) rose 10% to Rs 30,114 crore although the non-performing assets (NPA) ratio rose slightly to 1.36%,000. too The bank’s retail division is expected to accelerate and therefore have a positive short-term impact on the loan book.
HDB Financial Services IPO on the Horizon
HDFC Bank is preparing to sell its stake in HDB Financial Services for Rs 10,000 crore through an offer for sale (OFS). The total IPO of Rs 12,500 crore includes additional funding of Rs 2,500 crore. HDB Financial Services must be registered by September 2025, according to the Reserve Bank of India (RBI). After the initial public offering (IPO), HDFC Bank will still hold the majority stake, 94.64%, of the company.
Nevertheless, the bank’s leadership remains optimistic about buffering the current trend and is confident in its plans for continued expansion while managing the changing credit environment.
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