HDFC Bank shows no Covid scar in deposit growth

Mumbai: Private lender HDFC Bank on Monday said it recorded advances growth of 16% in the September quarter over the same period last year while its deposits grew 20%. At the end of September it’s total advances stood at Rs 10.37 lakh crore against Rs 8.9 lakh crore during the corresponding period last year, the lender said in an exchange filing.

On the liabilities side, the lender recorded a deposit growth of 20% taking its tally to Rs 12.2 lakh crore against Rs 10.2 lakh crore during the same period last year. Though sequentially both loans and deposits grew by 3%.

The credit and deposit growth for HDFC Bank was considerably slower over the June quarter in which it had recorded a 21% rise in loans and 25% growth in liabilities.

Credit growth continues to be at 40 year low levels of 5%. As per RBI data retail loan growth stood at 10.6% YoY vs average of 16.4% YoY during FY20. Rating agency ICRA also revised its credit growth estimate for banks to 2-3% in the current fiscal, down from 6-7% earlier.

While large part of the growth would have come from pent up demand, how much of this demand is sustainable would be the key thing to watch out for in the coming months, Macquarie Capital estimated.

HDFC Bank chief Aditya Puri had said last week that the lender, would harness pent-up demand from retail customers to help its business surpass the levels seen before the shutdown, anticipating borrowers to take out new loans to buy cars, appliances and other consumption items in the festive season.

“HDFC Bank is back to pre-Covid levels; there is no strain on our balance sheet and we have strong capital adequacy levels,” Puri had said. “People have started to spend, going forward we will actually see it (business) going to pre-COVID levels. Post lockdown we are seeing green shoots. We want to create positivity and boost consumption.”

The bank also improved its CASA ratio which stood at 42% against 39.3% last year. It also bought loans worth Rs 3026 crore through the direct assignment route under the home loan arrangement with mortgage lender Housing Development Corporation Ltd., (HDFC).