HDFC Bank, India’s largest private sector bank, expects loan book to grow by 11.9% on year and deposits slightly lower at 11.5% as on December 31, according to the provisional figures released by the bank on Monday. This growth in loans is a sharp pick up from 9.9% growth in the September quarter and 6.7% in the June quarter.

On a sequential basis too, the loan book is seen rising 2.7% to Rs 28.45 lakh crore and deposits up 2.1% to Rs 28.6 lakh crore. Considering these figures, the loan-deposit ratio of the bank as on December 31 has increased by 60 basis points on a sequential basis to 99.5%. In Q2FY26, the bank’s management had said that they expect the loan growth to match the industry in the current financial year and exceed it in FY2027.

HDFC Bank’s merger with parent HDFC

HDFC Bank’s merger with parent HDFC in July 2023 brought in a large loan book but comparatively fewer deposits, forcing the lender to focus on shoring up liabilities or tempering credit expansion. The LDR as on December 31, 2023 was at 110%. Since then, the bank has ensured deposit growth outpaces loan growth to keep its loan-to-deposit ratio in check. The bank had targeted to bring down the LDR levels to pre-merger levels of 85-90% by FY27.

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Within deposits, the bank’s current account and savings account (CASA) deposits are seen rising 10.1% on year to Rs 9.6 lakh crore as on December 31. While, time deposits are expected to rise higher at 12.3% on year to Rs 18.98 lakh crore. On a quarter-on-quarter basis too, growth in time deposits was higher than the growth in the CASA deposits, the provisional data showed.

What does the report published by Emkay suggest?

According to a report by Emkay, the bank has gained market share and remains hopeful of steady improvement in CASA as cannibalisation of term deposits recede. “This—along with further cut in share of borrowings from 13% to 6-7%, deposit re-pricing, lower PSL drag, and change in portfolio toward retail (including unsecured loans) and SME—would support margin (from FY27) once the rate cut cycle is behind,” the report said. As on December 31, the bank’s advances under management were nearly Rs 29.46 lakh crore, a growth of around 9.8% on year.

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On Monday, the shares of HDFC Bank closed 2.3% lower at Rs 978.50 on NSE. The bank is scheduled to announce its financial results for Oct-Dec quarter on January 17.

Axis Bank is expected to report a loan growth of 14% and a deposit growth of 15% as on December 31. Within deposits, the CASA deposits are seen rising 13.9% on year to Rs 4.93 lakh crore, while term deposits are seen growing at nearly 16% on year to Rs 7.67 lakh crore for the quarter ended December, provisional data showed.