HDFC Bank will take a couple of years to bring its credit-deposit (CD) ratio down to the pre-merger level of below 90%. Following its merger with mortgage lender Housing Development Finance Corporation, the CD ratio surged past 100%. It has moderated since, and now stands at 98%.
“We have articulated earlier that in the current fiscal, we will be growing lower than the system. In FY26, we will grow in line with the system, and in FY27, we will grow higher than the system,” said Srinivasan Vaidyanathan, chief financial officer, during the post-earnings call. “So that’s the kind of trajectory – it will take a couple of years for the CD ratio to get back to the pre-merger level.”
The management had said last year that the lender would grow its advances slower than deposits and will work to lower its credit-to-deposit ratio to the pre-merger level.
After its merger with mortgage lender HDFC in July 1, 2023, the bank received a large pool of mortgage loans to its portfolio, but a smaller amount of deposits in comparison, taking the CD ratio above the 100% mark. Prior to the merger, its CD ratio was at 85% and lender had maintained the ratio at 85-87% over a long period.
While the bank will go slow in growing the loan book, it will continue to be aggressive in mobilising deposits. On the deposits front, HDFC Bank posted a growth of 15% and the CFO said there is no calibration and it wants to grow as fast as it can. “As far as the deposit growth is concerned, there is no calibration… and we want to grow as fast and as much with the right customer base,” said Vaidyanathan.
On expansion, the CFO said the bank will continue to open branches as they play a crucial role in growing granular deposits. “The important aspect for our granular deposit growth is the reach. And we are expanding our reach to get the customers there,” he said.