The HDFC Bank share price will be closely watched on Monday after the country's largest private sector lender presented its December quarter business update, which showed a small increase in gross advances and a strong gain in deposits. On Friday, HDFC Bank's stock price closed 2.46% lower at ₹1,749.30 a share on the BSE.
HDFC Bank's gross advances in Q3 FY25 grew by 3% YoY to ₹2,54,250 crore. Gross advances increased 0.9% sequentially.
In Q3FY25, HDFC Bank's total deposits increased by 2.5% QoQ and 15.8% YoY, reaching ₹2,56,350 crore, according to a regulatory filing.
CASA deposits fell by 1.2% QoQ and 4.4% YoY, reaching ₹87,250 crore. The CASA ratio in the December quarter fell to 34.04%, down from 35.34% in the September quarter and 37.74% in the same period last year.
In the December 2024 quarter, HDFC Bank's average advances under management (including inter-bank participation certificates, bills rediscounted, and securitization/assignment) reached ₹26,27,600 crore, representing a 7.6% YoY rise and a 2.5% QoQ growth.
"HDFC Bank's Q3 business update shows mixed results. However, the Credit-Deposit Ratio fell below the key 100% barrier, to 99.18% from 111.53% the previous year, indicating that credit demand is slower than deposit inflow. CASA deposits (current and savings accounts), a major indicator of low-cost funding, experienced a sequential fall, which may harm net interest margins in the short term," added Anshul Jain is Head of Research at Lakshmishree Investment and Securities.
While deposit growth remains strong, slowing loan growth and dropping CASA call into question the bank's growth momentum in the face of tightened liquidity and a tough macroeconomic climate. A concentrated strategy will be essential for maintaining profitability and handling adversities, Jain noted.
Investment in other banks
In a separate regulatory filing on Friday, HDFC Bank stated that it has received approval from the Reserve Bank of India (RBI) to buy a share of up to 9.5% in Kotak Mahindra Bank, AU Small Finance Bank, and Capital Small Finance Bank within one year of the approval date.
Should you purchase HDFC Bank shares?
Mahesh M Ojha, AVP — Research at Hensex Securities, suggests a 'buy on dip' approach for HDFC Bank shares.
"A 'buy on drop' approach in HDFC Bank stock may be beneficial following the Q3 business update. "Traders can buy HDFC Bank shares around ₹1,710 - 1,720 levels, with a stop loss at ₹1,668, and a medium term target price of ₹1,850 - 1,900," Ojha stated.
