The loan book of HDFC Bank surpasses Rs 25L cr, and the stock rises more than 3%

The biggest private sector lender in the nation, HDFC Bank, said on Thursday that as of the end of March, its loan book had surpassed Rs 25 trillion (Rs 25 lakh crore). This news caused a sharp increase in the shares of the bank, which had been plunging since its merger with its parent last July.

Following a massive gap-up opening, the market saw a bumpy trading for the whole market. However, towards the conclusion of the day, it saw gains, mostly due to the over 3% rebound in the HDFC Bank counter, which has the greatest weighting in both indexes. After peaking at Rs 1,529.9 on the BSE, the counter ultimately finished at Rs 1,527.9, up 3.06%. The shares fell from nearly Rs 1,700 before to the merger to a low of Rs 1,365 since the merger.

The second-largest lender after SBI said in an exchange filing that as of March 31, 2024, its gross advances were Rs 25.08 trillion, up 55.4% from Rs 16.14 trillion as of March 31, 2023. The merger added over Rs 6 trillion to the loan book as part of the additional expansion.

The bank said that the data are not comparable since they include those of its former parent company, HDFC, which underwent a reverse merger with the bank on July 1, 2023. The loan growth has been weak on a quarter-to-quarter basis, increasing by only 1.6% from Rs 24.69 trillion in December 2023.

Head of research at Geojit Financial Services Vinod Nair told the New Indian Express that the retail book, which includes house, consumer, and personal loans, led the jump in advances, which is better than the industry average and was the main cause of the stock gain. The fact that the retail deposit base has grown significantly, supporting the deposit base’s resilience and enhancing its chances for future profitability, is another plus.

Nair said that business data point to a favorable outlook for profits growth, especially in light of the synergies expected from the transaction, but he did not provide a price estimate for the company.

Domestic retail loans increased by 109% between March 2023 and December 2023, while commercial and rural banking loans increased by 24.6% and 4.2%. Corporate and other wholesale loans, which did not include non-individual loans from the former HDFC, increased by almost 4.1% during this same period, according to the bank’s internal business classification.

As of March 2024, deposits were Rs 23.8 trillion, up 26.4% from Rs 18.83 trillion and 7.5% from Rs 22.10 trillion in December 2023. This represents an on-year gain in deposits. According to the report, during this time, wholesale deposits increased by 19.4% and 10.9% (or Rs 38,000 crore) while retail deposits increased by 27.8% and 6.9% (or Rs 1.2 trillion), respectively.

After dominating the market for decades, low-cost current account savings account (Casa) deposits surged to Rs 9 trillion in March 2024, a decrease of 8.7 percent year over year.