HDFC Bank's loan book expands by 19.5%, domestic retail loans grow 21.5%

IndusInd sees 19% credit growth in Q3; deposit growth outpaces loans for HDFC Bank, YES Bank

The country’s largest private sector lender — HDFC Bank — has reported a 19.5 per cent year-on-year (YoY) growth in advances in the October-December quarter (third quarter, or Q3) of 2022-23 (FY23) to Rs 15.07 trillion. This growth was spurred by domestic retail loans which grew 21.5 per cent and commercial and rural banking loans by 30 per cent YoY.

Sequentially, HDFC Bank’s credit growth was 1.8 per cent, with retail, commercial, and rural banking loans growing 5 per cent over the July–September quarter. Meanwhile, the corporate and wholesale loan book has grown 20 per cent YoY and fallen 1 per cent sequentially. Interestingly, HDFC Bank’s deposit book has grown around 20 per cent YoY and 3.6 per cent sequentially to Rs 17.33 trillion in Q3FY23.

“This is in complete contrast to what the overall banking system is reporting with a big gap between deposit growth at 9 per cent and loan growth at 17 per cent YoY. According to our calculations and estimates, HDFC Bank’s incremental deposit market share could be closer to 25 per cent in deposits, compared to an outstanding market share of 10 per cent. HDFC Bank is gaining significant market share, even from its larger private sector peers,” said Suresh Gana­pa­thy, associate director, Macquarie Capital.

Retail deposits rose by Rs 67,000 crore in Q3 and by around 21.5 per cent YoY. They grew around 5 per cent sequentially.

Similarly, wholesale depo­sits grew by 11.5 per cent YoY, but were lower by 2.5 per cent sequentially.

That retail and commercial/rural banking is growing faster and the bank is focusing more on retail deposits and letting go of high-cost wholesale deposits imply that margins are unlikely to come under any pressure due to lower current account savings account (CASA) growth. Plus, a rising rate cycle will be beneficial to immediate repricing of repo rate-linked loans which comprise 30 per cent of its loan book, said Ganapathy.

IndusInd Bank, which came out with its Q3 update on Wednesday said its advances grew 19 per cent YoY and 5 per cent sequentially to Rs 2.71 trillion in Q3. Conversely, its deposit book posted a 14 per cent YoY growth and a 3 per cent sequential growth to Rs 3.25 trillion.

YES Bank intimated the exchanges on Wednesday, saying its advances have grown by around 12 per cent YoY and 2.4 per cent sequentially to Rs 1.96 trillion in Q3. The bank has disbursed Rs 12,189 crore in the retail segment in the quarter, compared with Rs 12,563 crore in the previous one.

HDFC Bank and YES Bank have seen higher deposit growth than loan growth. This is in stark contrast to the industry trend where the gap between credit and deposit growth is around 800 bps.

Meanwhile, Punjab & Sind Bank has reported loan growth of 17 per cent YoY and nearly 6 per cent sequential growth to Rs 78,049 crore in Q3.

YES Bank’s CASA ratio has remained stable. CASA growth has been weak and its overall CASA share has declined, particularly because of greater focus on term deposits. Usually, in a rising interest-rate scenario, the CASA ratio declines, observed Ganapathy.