HDFC Bank garners record Rs 1.5 trillion deposits in a quarter

This is the highest in a three-month period since merger announcement with HDFC Ltd

HDFC Bank has exceeded its target of garnering Rs 1 trillion in deposits during a quarter for the first time since it announced its merger with HDFC Ltd in April last year.

During the January–March quarter (Q4) of FY23, the country’s largest private sector lender mopped up over Rs 1.5 trillion in deposits. This is a record for the bank, which saw its deposit base touch Rs 18.88 trillion.
 

According to the bank’s disclosure to the exchanges, its deposits grew by 21 per cent year-on-year (YoY) in Q4, a multi-quarter high. Sequentially also, deposits saw a growth — of 8.7 per cent.
 

HDFC Bank’s deposit growth is much higher than the industry, which is growing around 10 per cent.
 

However, the bank has fallen short of its yearly target of Rs 4 trillion for deposits in a financial year.
 

In FY23, the bank mopped up Rs 3.24 trillion, up 45 per cent compared to last year (FY22). It had earlier garnered over Rs 1 trillion in deposits in a quarter only once since 2015.
 

In Q4 of FY22, deposit mobilisation by the bank was Rs 1.13 trillion.
 

“QoQ (quarter-on-quarter) deposit accretion was Rs 1.5 trillion, taking the full-year deposit accretion to Rs 3.2 trillion, which is encouraging in our view. As of March 2023, system deposit growth was 10.3 per cent. While we don’t have March 31, 2023, system deposit growth numbers — considering that nine-month YTD (year-to-date) incremental market share was 19 per cent — HDFC Bank could have ended FY23 with an incremental market share of 20 per cent in our view. This is very encouraging,” said Suresh Ganapathy, associate director, Macquarie Capital, in a note.
 

“The over 1,500 branches likely to be added in FY23 will further give impetus to deposit mobilisation in FY24. For a Rs 4-trillion deposit mobilisation target in FY24E, HDFC Bank needs to achieve 25 per cent YoY growth in incremental deposits for FY24E. This is achievable in our view,” he added.
 

The bank set itself a target of mobilising Rs 1 trillion in deposits every quarter, aggregating to Rs 4 trillion in a financial year. This is because it would need approximately Rs 3.5 trillion in deposits to maintain the 18–20 per cent growth it has sustained over the last few years on the asset sides.
 

Around Rs 5–6 trillion of HDFC Ltd assets will also get added to the bank’s existing assets when the merger takes place.  

“For many years now, the bank has been growing at 18-20 per cent. Currently, the bank has about Rs 14 trillion worth of advances. There will be about Rs 5–6 trillion worth of HDFC Ltd advances. If the bank keeps growing at 18-20 per cent, the balance sheet will double automatically. Assuming, the bank has Rs 19 trillion on the day of merger, and it grows at 18 per cent, then it will need approximately Rs 3.5 trillion in deposits (per year),” said a source.
 

“If the bank is able to raise closer to Rs 1 trillion per quarter before the merger, then it will be able to absorb the merger easily from the perspective of funding growth,” the source quoted above added.
 

HDFC Bank has requested the Reserve Bank of India (RBI) for a phased-in approach in respect of statutory liquidity ratio (SLR)/cash reserve ratio (CRR), priority sector lending (PSL), grandfathering of certain assets and liabilities as well as in respect of some subsidiaries.
 

Unlike other banks, which are cutting down on branches and going more digital, HDFC Bank is looking to increase its branch presence across the country.
 

It has planned to add about 1,500–2,000 branches each year to its network, as this will help in mobilising deposits.