HDFC Bank's market cap only slightly trails Goldman Sachs

The merger significantly increased the bank’s loan portfolio but left it with a relatively smaller deposit base, the report said, pushing the loan-to-deposit ratio (LDR) to 104 percent in March 2024.

Since then, HDFC Bank has prioritised deposit mobilisation, reducing the LDR to 96.5 percent by March 2025.

According to what the CFO Srinivasan Vaidyanathan said during a press call, the bank’s management expects the LDR to return to pre-merger levels of 85-90 percent by FY27.

The bank has capitalised on improved systemic liquidity and lowered interest rates on savings accounts (by 25 basis points for balances below Rs 50 lakh) and fixed deposits to attract cost-effective deposits, according to the analyst report.

This has helped stabilise NIMs, which are projected to reach 3.5-3.6 percent by FY27 as high-cost borrowings are phased out and the loan mix shifts toward higher-yielding retail assets.

Nuvama noted, “HDFC Bank is addressing near-term post-merger headwinds by focusing on deposit mobilization and balance sheet rebalancing,” forecasting deposit growth at a 15 percent CAGR between FY25 and FY27.

On the other hand, unlike HDFC Bank, Goldman Sachs does not rely on a traditional deposit base or retail lending, making the two entities not directly comparable. Yet, the proximity in market cap highlights HDFC Bank’s ability to compete with global financial giants, even as it navigates domestic challenges like deposit pressures and a looming rate-cut cycle.

Moreover, Goldman Sachs recently initiated a 'BUY' rating on HDFC Bank.

It also said the bank has the potential to cross the Rs 2,000 mark in the stock market, driven by easing regulatory norms and improving financial metrics.