Why Are HDFC Shares Trading Lower Today After the HDFC-HDFC Bank Merger?

After the lender released its business report for the period ending June 30, 2023, HDFC Bank shares fell on Wednesday (July 5). At 12:57 IST, HDFC Bank Limited’s share price was down 2.90% at Rs 1,678.05 a share. Other developments exist as well, and they are likely to have affected the stock’s share price during today’s intraday trading.

Housing Development Finance Corporation (HDFC), a mortgage lender, would be replaced by LTIMindtree, a division of Larsen & Toubro, as on July 13.

This comes after the merger of HDFC with HDFC Bank, the biggest private lender in the nation, went into force on July 1.

Examining the financials of the business

As of June 30, 2023, the Bank’s advances were over Rs 16,155 billion, up about 15.8% from Rs 13,951 billion at that time.

Domestic retail loans increased by about 20.0% over June 30, 2022, and by about 4.0% over March 31, 2023, according to the Bank’s internal business classification. Commercial and rural banking loans increased by about 29.0% over June 30, 2022, and by about 2.0% over March 31, 2023. Corporate and other wholesale loans increased by about 11.0% over June 30, 2022, but decreased by about 1.0% over March 31, 2023.

The Bank acquired loans of Rs. 116.32 billion via direct assignment during the quarter that ended June 30, 2023, as part of the mortgage loan agreement with Housing Development Finance Corporation Limited.

A business update was also provided by the lender about the combined balance sheet of HDFC Bank Limited and HDFC Limited.

(i) As of June 30, 2023, the combined gross advances of the Merged business were over Rs 22,450 billion, an increase of roughly 13.1% over Rs 19,859 billion at that time and roughly 0.7% above Rs 22,302 billion at that time.

(ii) As of June 30, 2023, the combined gross advances of the Merged business, excluding wholesale advances from HDFC Ltd., were around Rs. 21,365 billion, an increase of roughly 15.3% over Rs. 18,522 billion at that time and roughly 1.3% above Rs. 21,097 billion at that time.

(iii) As of June 30, 2023, the combined deposits of the Merged company were around Rs 20,635 billion, an increase of roughly 16.2% over Rs 17,760 billion as of June 30, 2022, and an increase of 1.2% over Rs 20,394 billion as of March 31, 2023.

(iv) On a proforma basis, the average LCR of the merged firm for the three months ending June 30, 2023, was close to 120%.

Swiggy and HDFC Bank will collaborate in a co-branded credit card competition.

According to sources quoted in an ET story, foodtech giant Swiggy is anticipated to combine with private sector lender HDFC Bank to create the co-branded credit card, with Mastercard anticipated to be the network partner.