HDFC Bank will reach pre-merger credit ratios in FY27, focusing on expansion, distribution
Mumbai: HDFC Bank expects its credit (CD) ratio to get a pre-level level of 85-90% in fiscal 27 as India’s largest private-sector lender strengthens efforts to increase deposits faster than loans. The strategy is part of the bank’s post-bank recalibration after integration with HDFC Ltd in July 2023.
CFO Srinivasan Vaidyanathan said in a earnings call after its March quarter results that the bank will align its deposit rates with the broader market as interest rates drop, while focusing on expanding its distribution network to gain market share in deposits.
“We still maintain competitive prices across the five major banks. This means there is no advantage of a specific interest rate on savings deposits between us or peer banks,” Vaidyanathan said. “This does not offer a competitive difference, but we believe that our distribution strength, increasing customer and engagement should set us apart from the perspective we get from the market share.”
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HDFC Bank’s CD ratio rose to 96.5% in the March quarter, down from its post-merger peak of 110% and 104.4% a year ago. Vaidyanathan said the bank “has enough deposits and loans to grow” as liquidity and economic growth improves.
India’s largest private-sector lender reported net profits independent ₹March quarter was 176.16 million ₹165.12 million a year ago. Net interest income increased by 10.3% year-on-year ₹At 320.7 million, net interest margin expanded moderately to 3.5%, and the total progress increased by 5.4%.
HDFC Bank led the savings rate reduction cycle for large banks, reducing interest rates on savings account deposits by 25 basis points last week and raising fixed deposits by 50 basis points earlier this week. This rate move occurs while banks want to manage the cost of funds while recalibrating their credit ratio to pre-merger levels.
Total deposits increased by 14.1% year-on-year ₹As of March 31, 2025, US$27.1 trillion. Time deposits rose 20.3%, while CASA (current and savings account) deposits rose 3.9%, increasing the CASA ratio to 34.8%. The bank has a deposit market share of 11.1%, and its issuance footprint accounts for 6% of the industry’s total. Each branch’s deposits accumulate to ₹3 billion, from ₹Last year, 80 million.
“We will continue to lead market share,” Vaidyanathan said. “Our efforts are to reach our pre-merger in the event that we normally operate between 85-90%.
Although deposit growth has led, loan growth is expected to be consistent with system-level growth in FY26 lagging behind FY25. The bank is expected to exceed the market for fiscal 27 years and regain shares in loans.
To manage loan growth and funding, the bank will continue to prove assets over the next three to five years. This should provide us with “a range that will allow us to grow faster and keep up with the market opportunities that will emerge so that we can securitize and fund these loans in an optimized way.”
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Total gross growth of 5.4% year-on-year ₹As of March 31, 2025, US$26.4 trillion. Retail loans rose 9%, while commercial and rural bank loans rose 12.8%. Companies and other wholesale loans, by comparison, fell 3.6%.
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Vaidyanathan said mortgages account for 30% of the total books, other retail loans account for 19-20%, commercial and rural banks account for about 33%, and corporate and wholesale loans account for 16-17%. He added that given the relatively low credit penetration rate in this segment, the biggest growth potential at present is retail lending.
The bank’s physical network extends to 9,455 branches and 21,139 ATMs in 4,150 cities, up from 8,738 branches and 20,938 ATMs in 4,065 cities a year ago.
