In a historic $40-billion merger, HDFC Bank and HDFC Ltd have witnessed substantial growth in their combined loan book and deposits during the first quarter of FY24. This merger marks the largest deal in the history of Indian corporate, positioning HDFC Bank as the world’s fourth most valuable lender and closing the asset size gap with state-owned SBI.
Combined Loan Book Expansion
The combined loan book of HDFC Bank and HDFC Ltd saw an impressive YoY expansion of 13.1 per cent, reaching Rs 22.45 trillion as of June 30, 2023. This significant growth signifies the positive impact of the merger on the financial strength of the combined entity.
Alongside the robust loan book expansion, the merged entity experienced a notable surge in deposits. Year-on-year, deposits grew by 16.2 per cent to Rs 20.63 trillion at the end of the first quarter, underlining the confidence and trust of customers in the merged financial institution.
HDFC Bank’s advances aggregated to approximately Rs 16,155 billion for the quarter ended June 30, indicating a remarkable increase of nearly 15.8 per cent from the previous year. This reflects the bank’s successful efforts in providing loans and credit facilities to various sectors.
Liquidity Coverage Ratio (LCR)
The merged entity’s average Liquidity Coverage Ratio (LCR) stood at around 120 per cent for the quarter ended June 30, 2023. This ratio indicates the combined entity’s ability to meet short-term obligations and underscores its sound liquidity position.
The performance data was shared by HDFC Bank, India’s largest private sector lender, for the merged entity on a proforma basis. To facilitate the merging of financials, Housing Development Finance Corporation (HDFC) closed its books of accounts a few days before the quarter ended June 30, 2023.
Deposit Portfolio Composition
During the quarter, retail deposits recorded a substantial YoY increase of 21.5 per cent, amounting to 2.5 per cent over March 2023, when analyzed on a standalone basis. On the other hand, the wholesale deposit portfolio witnessed a YoY growth of approximately 9.0 per cent, also rising 2.5 per cent over March 2023.
Share of CASA in Total Deposits
Despite the overall growth in deposits, the share of low-cost deposits, namely the current account and savings account (CASA), declined slightly to around 42.5 per cent as of June 30, 2023, from 45.8 per cent a year ago. The share of CASA in total deposits also decreased from 44.4 per cent as of March 2023.
The Q1 performance of the merged entity demonstrates the successful integration of HDFC Bank and HDFC Ltd, resulting in substantial growth in the combined loan book and deposits. With the potential to become the world’s fourth most valuable lender, HDFC Bank’s position in the Indian banking sector is poised to strengthen significantly.
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