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



The private sector lender’s current and savings account ratio was 37.6% as of 30 September 2023 compared to 42.5% as of 30 June 2023.

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 continued to see a rundown of its non-compliant book. Wholesale advances declined 6% quarter on quarter and 20% yoy. The non-individual loan book of erstwhile HDFC stood at 1.02 trillion as of 30 September 2023.

According to a Bloomberg report, the bank is in the midst of a management rejig after the merger.

Ashish Parthasarathy, who has led treasury for the bank since 2009, will now get the additional responsibility for the retail branch business, which handles deposits and product distribution.

Smita Bhagat, Group Head, and Sampath Kumar, Group Head, will be the two new Retail Branch Banking Heads.

The large mortgage book, which HDFC Bank acquired from its parent, will now be headed by Arvind Kapil, who previously headed Retail Assets of the bank. In his new role, Arvind Kapil will now spearhead the Mortgage business, including Home Loan, Loans Against Property, and HDFC Sales. After the merger, the share of mortgage in HDFC Bank’s loan book stood at 35%.

Arvind Vohra, who previously headed retail branch banking, will now move as Group Head of Retail Assets (excluding Mortgages and SLI).

In a sell side analyst meet held earlier this month, HDFC Bank CFO Srinivasan Vaidyanathan cautioned against worsening of net interest margin (NIM), net worth and asset quality in the short-term following its merger. He also said that the bank is likely to see its bad-loan ratios worsen marginally due to the merger.

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