HDFC Bank aims to improve loan growth after lowering credit-to-deposit ratio

HDFC Bank sees room for CD ratio gains and better funding efficiency after merger reset

After sharply lowering its credit-to-deposit (CD) ratio following the merger, HDFC Bank now aims to enhance balance sheet efficiency more gradually.

The management explained that the immediate priority post-merger was to shore up deposit buffers — even at the cost of CASA share — to bring the CD ratio down to more comfortable levels amid tight liquidity. Having achieved this, the bank is now looking to improve deposit quality and support higher loan growth.

“We had a compulsion to bring down our CD ratio rather quickly, which we did reasonably well last year. From that low base, momentum is already visible, and we expect sequential improvement over the next three quarters,” the management said in its post-results call.

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The lender also plans to re-energize CASA growth by deepening customer engagement and cross-selling more products, which is expected to improve funding efficiency over time.

As of June 30, 2025, HDFC Bank’s gross advances stood at Rs 26.53 lakh crore, marking a 6.7 percent increase year-on-year, while total deposits rose 16.2 percent to Rs 27.64 lakh crore.

The CASA ratio, however, declined to 33.9 percent from 38.2 percent in Q1FY25, with savings deposits at Rs 6.39 lakh crore and current account balances at Rs 2.98 lakh crore.

Meanwhile, the bank’s capital adequacy ratio (CAR) improved to 19.88 percent from 19.33 percent a year earlier. Asset quality remained broadly stable, with the gross NPA ratio at 1.40 percent and the net NPA ratio at 0.47 percent as of June 30, slightly higher than the year-ago levels. Return on assets held steady at 0.48 percent.

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