MUMBAI: The country’s largest private sector lender HDFC Bank on Thursday said its loan book crossed Rs 25 trillion (Rs 25 lakh crore) mark as of end-March, spawning a massive rally in its stock, which has been down in the dumps since the merger with its parent last July.
Buckling a choppy trade for the broader market after a huge gap-up opening the market went into the red mid-day but gained towards the end, primarily because of the over 3% rally in the HDFC Bank counter, which has the largest weighting in both the indices. Finally, the counter settled with 3.06% gains at Rs 1,527.9 after hitting a high of Rs 1,529.9 on the BSE. Since the merger the stock had hit a nadir of Rs 1,365 from over Rs 1,700 pre-merger.
In an exchange filing, the second-largest lender after SBI, said its gross advances stood at Rs 25.08 trillion as of March 31, 2024, a growth of 55.4% from Rs 16.14 trillion as of March 31, 2023. Of the incremental growth, the merger contributed to close over Rs 6 trillion to the loan book.
The figures include those of its erstwhile parent HDFC, which was had a reverse merger with the bank on July 1, 2023, and hence are not comparable, the bank said. On a quarter-on-quarter basis, the loan growth has been feeble inching up only 1.6% from Rs 24.69 trillion in December 2023.
Vinod Nair, head of research at Geojit Financial Services, told the New Indian Express that the stock rally was primarily due to the surge in advances, which is better than industry average, led by the retail book consisting home, consumer, and personal loans. Another positive is that the deposit base remains resilient, bolstered by significant growth in retail deposits, thus fortifying its prospects for future profitability.
Business metrics indicate a positive outlook for earnings growth, particularly with respect to the synergies anticipated from the merger, Nair added, but did not offer a price target for the stock.
According to the bank’s internal business classification, domestic retail loans grew 109% over March 2023 and 3.7% over December 2023, while commercial and rural banking loans grew 24.6% and 4.2% and corporate and other wholesale loans, excluding non-individual loans of the erstwhile HDFC, grew nearly 4.1% during this period.
Deposits rose to Rs 23.8 trillion as of March 2024, clipping at an on-year growth of 26.4% over Rs 18.83 trillion and 7.5% over Rs 22.10 trillion in December 2023. Of this, retail deposits grew 27.8% and 6.9% (Rs 1.2 trillion) and wholesale deposits grew 19.4% and 10.9% (or Rs 38,000 crore), respectively, during this period, it said.
The low-cost current account saving account (Casa) deposits, wherein it has been the market leader for decades, jumped to Rs 9 trillion in March 2024, clipping 8.7 percent on-year.