HDFC Bank deposits increase

HDFC Bank Q2 Business Update 2024: Advances Rise 7%, Deposits Surge 15%

HDFC Bank, India’s largest private sector bank, released its Q2 FY25 business update, showcasing steady growth in advances and deposits, despite some challenges in corporate and wholesale loans. Here’s a detailed breakdown of the bank’s financial performance for the quarter ending September 2024.

Key Figures and Performance Metrics

1. Total Advances:
   • HDFC Bank’s total advances under management (which includes loans that were securitised or sold) rose to ₹26.34 lakh crore as of September 30, 2024. This reflects an 8% YoY growth from ₹24.37 lakh crore in September 2023, and a 2.3% QoQ rise from ₹25.75 lakh crore in June 2024.
   • Gross advances (excluding securitised loans) increased by 7% YoY and 1.3% QoQ, reaching ₹25.2 lakh crore.
2. Retail, Commercial, and Rural Loans:
   • Retail loans showed robust growth, increasing by ₹33,800 crore during the quarter.
   • Commercial and rural banking loans also performed well, with an increase of ₹38,000 crore.
3. Corporate and Wholesale Loans:
   • Unlike the retail and rural segments, corporate and wholesale loans witnessed a decline, falling by ₹13,300 crore compared to the previous quarter.
4. Deposits Growth:
   • HDFC Bank reported a 15.4% YoY growth in total deposits, reaching ₹25 lakh crore by the end of September 2024, up from ₹21.73 lakh crore in September 2023.
   • On a QoQ basis, deposits grew by 5.1%, up from ₹23.79 lakh crore in June 2024.
5. CASA Deposits:
   • CASA (Current Account Savings Account) deposits increased by 8% YoY, totaling ₹8.84 lakh crore. However, the QoQ growth in CASA deposits was slower at 2.3%.
   • On an average basis, CASA deposits for the quarter amounted to ₹8.08 lakh crore, up 7.3% YoY but down slightly by 0.3% QoQ.
6. Time Deposits:
   • Time deposits (fixed deposits) surged by 19.3% YoY, reaching ₹16.17 lakh crore, and grew by 6.7% QoQ from ₹15.16 lakh crore in the previous quarter.
7. Advances and Deposits on Average Basis:
   • On an average basis, HDFC Bank’s advances in Q2 FY25 were ₹25.63 lakh crore, reflecting a 10.2% YoY increase and a 1.2% QoQ rise.
   • Average deposits grew 15.4% YoY, totaling ₹23.53 lakh crore, with a 3.1% increase from the previous quarter.
8. Liquidity Coverage Ratio (LCR):
   • HDFC Bank maintained a strong liquidity coverage ratio (LCR) of 127%, reflecting prudent liquidity management.

Analysis of HDFC Bank’s Performance

1. Steady Growth in Advances and Deposits:
   • The bank’s advances have grown steadily, especially in the retail and rural segments. This indicates a healthy demand for personal loans and loans in non-urban areas.
   • The 15% YoY rise in deposits signals strong confidence among depositors, aided by a surge in time deposits, which grew by 19.3%. Time deposits outpacing CASA growth suggests that customers may prefer locking their money into higher-yield fixed deposits in a rising interest rate environment.
2. Decline in Corporate and Wholesale Loans:
   • One area of concern is the ₹13,300 crore decline in corporate and wholesale loans. This could indicate cautious lending to large corporates or a slowdown in demand for large-scale loans during the quarter.
3. CASA Growth Slowing Down:
   • Although CASA deposits grew by 8% YoY, the 2.3% QoQ rise and slight 0.3% QoQ decline on an average basis suggest a slowdown in the growth of lower-cost deposits. This could impact the bank’s net interest margins if the trend continues.
4. Strong Liquidity Position:
   • The 127% LCR demonstrates that HDFC Bank has strong liquidity reserves, ensuring that the bank can meet its short-term obligations and maintain stability during market fluctuations.

Advantages of HDFC Bank’s Q2 Performance

1. Consistent Growth in Advances: The bank’s advances grew across retail, commercial, and rural segments, reflecting strong lending activity and demand for loans in these areas.
2. Robust Deposits Growth: A 15.4% YoY increase in deposits highlights customer trust in the bank and its ability to attract deposits.
3. Strong Liquidity Management: HDFC Bank’s 127% LCR indicates strong liquidity management, ensuring the bank’s ability to meet its obligations even in challenging market conditions.
4. Retail and Rural Loan Strength: With retail and rural loans showing significant growth, the bank is well-positioned to benefit from rising consumer demand in India’s non-urban regions.

Disadvantages and Risks

1. Decline in Corporate Loans: The fall in corporate and wholesale loans may signal weak demand from large businesses or a more cautious lending approach by the bank, which could slow overall loan growth.
2. Slower CASA Growth: CASA deposits, which are a low-cost source of funds, grew more slowly than time deposits. This could put pressure on the bank’s margins, as it may need to rely more on higher-cost deposits.
3. Competitive Pressure: HDFC Bank continues to face intense competition in the Indian banking sector, especially from other large private sector banks and public sector banks, which are also aggressively expanding.

Conclusion

HDFC Bank’s Q2 FY25 performance shows consistent growth in advances and deposits, reflecting strong customer demand and prudent management. However, the decline in corporate loans and slower growth in CASA deposits are areas of concern that the bank will need to address. Despite these challenges, the bank remains well-capitalized with a strong liquidity position, which should help it navigate potential market challenges in the coming quarters.

FAQs

1. What was HDFC Bank’s total advances in Q2 FY25?
   • HDFC Bank’s total advances under management stood at ₹26.34 lakh crore as of September 30, 2024, reflecting an 8% YoY growth.
2. How did HDFC Bank’s deposits perform in Q2 FY25?
   • HDFC Bank’s total deposits grew by 15.4% YoY, reaching ₹25 lakh crore by the end of September 2024.
3. What is HDFC Bank’s CASA growth in Q2 FY25?
   • CASA deposits grew 8% YoY to ₹8.84 lakh crore, with slower QoQ growth of 2.3%.
4. What was the liquidity coverage ratio (LCR) for HDFC Bank in Q2 FY25?
   • HDFC Bank maintained a healthy LCR of 127%, reflecting strong liquidity management.
5. What challenges did HDFC Bank face in Q2 FY25?
   • The main challenges were a decline in corporate and wholesale loans and slower CASA growth, which could affect the bank’s margins in the coming quarters.

HDFC Bank deposits increase

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