HDFC Bank says deposit cuts won't hurt growth, eyes long-term play

The bank reported a 6.7 percent year-on-year increase in standalone net profit to Rs 17,616 crore in Q4

At a time when most large banks have cut deposit rates by 30 to 45 basis points (bps) following the Reserve Bank of India's (RBI's) 50 basis point repo rate cut so far in 2025, India's largest private lender HDFC Bank said they do not believe this will affect deposit mobilisation in the long run.

"Rate, in our view, hasn’t been the differentiator in the past, and we don’t believe it will be the differentiator going forward either. That approach is too short-term. So we remain confident in our positioning and strategy when it comes to deposits," HDFC Bank said during their earnings conference call.

HDFC Bank cut its deposit interest rates by 25 basis points. A basis point is one-hundredth of a percentage point. According to the bank’s announcement, effective April 12, 2025, savings deposits with balances below Rs 50 lakh will earn 2.75 percent, while those above Rs 50 lakh will earn 3.25 percent. This marks the first change in rates in about three years. Previously, the rates stood at 3 percent and 3.5 percent, respectively.

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The management pointed out that on the loan side, transmission tends to happen automatically to a large extent, since many loans are linked to policy rates. But on the deposit side, any changes are made only after careful internal deliberation and are handled with more caution.

"There hasn’t been any shift in competitive positioning per se. What truly differentiates players is distribution reach—how well you can bring in new customers and how engaged your relationship managers are. That’s what we’ve focused on. If you look at last year, we grew deposits by about 15.8 percent—around Rs 3.4 lakh crore. We remain optimistic and continue to channel our energy into gaining market share through customer engagement and network strength," the management added.

The bank's average deposits grew 15.8 percent year-on-year to Rs 25.28 lakh crore in the January-March quarter. Gross advances stood at Rs 26.44 lakh crore as of March 31, 2025, marking an increase of 5.4 percent compared to March 31, 2024.

In addition, the bank reported a 6.7 percent year-on-year increase in standalone net profit to Rs 17,616 crore, beating Street estimates. Net interest income (interest earned minus interest paid) for the quarter ended March 31, 2025, rose by 10.3 percent to Rs 32,070 crore.