HDFC Bank CEO sees tailwind from lower CD ratio, strong deposit growth

CEO Sashidhar Jagdishan says merger synergies, reduced credit-deposit ratio and aggressive but prudent deposit growth put HDFC Bank on strong footing for FY26-27

HDFC Bank is now well-positioned for faster growth after successfully navigating the merger of the erstwhile mortgage lender HDFC Ltd into itself, said Sashidhar Jagdishan, managing director (MD) and chief executive officer (CEO) of India’s largest private-sector lender.

 

HDFC Ltd merged into HDFC Bank on July 1, 2023, creating a financial behemoth. The bank recalibrated its loan growth in FY25 to bring down the elevated credit-deposit (CD) ratio post-merger. The reset in loan growth and the consolidation of the merger has resulted in a much stronger bank, Jagdishan said in a message to the shareholders.

 

“The successful playing out of the merger synergies, the reduction in the credit deposit ratio, and the large-scale mobilisation of deposits, all constitute tailwinds for your bank. To use a cricketing analogy, we focused on taking singles in the year that concluded and are now positioned to go for the boundaries,” he said.

 

In FY25, HDFC Bank grew its loan book by 5.4 per cent year-on-year (Y-o-Y), slower than industry growth. Deposits grew at 14.1 per cent Y-o-Y, 2.5 times faster than loans, which enabled the bank to bring down its CD ratio from about 110 per cent at the time of the merger to 96 per cent by March 31. High-cost borrowings also reduced to 14 per cent. The bank managed to garner an incremental deposit market share of approximately 14.6 per cent in FY25. “Aggression has been in intent and execution, but not in pricing, be it for assets or for liabilities,” Jagdishan said. 

 

The bank has a market share of 5 per cent of all branches in the banking system and 11 per cent of banking deposits. “We are confident of growing our advances on par with the system in FY26 and higher in FY27,” Jagdishan said, adding that the growth enablers remain technology, customer centricity, and people.

 

HDFC Bank added over 700 branches in FY25, taking the total to 9,455, and plans to add more. “Branches are the fulcrum of customer relationships, especially in the semi-urban and rural areas where we have more than half our branches. The new branches are our investments for the future, enabling us to serve local communities better,” he said.

 

 Jagdishan highlighted that the mortgage business, which was a key component of the merger, has grown to become the largest in the country, and has been a catalyst for increased cross-sell opportunities within HDFC Bank. “More than 95 per cent of the incremental home loan customers are now opening current account savings account accounts with the bank, with over half of them opting for additional product offerings,” Jagdishan said. 

Commenting on India’s growth prospectus, Jagdishan said: “Despite global headwinds, there is considerable optimism about the Indian economy, which is expected to remain the fastest-growing large economy in the world”. 

HC adjourns Jagdishan’s plea to quash FIR in Lilavati case

 

The Bombay High Court on Monday adjourned to July 23 the hearing of a plea filed by Sashidhar Jagdishan, managing director & chief executive officer of HDFC Bank, seeking the quashing of an FIR lodged against him by the Lilavati Trust. Jagdishan’s counsel sought interim relief and a complete stay on the probe. The case involves allegations that Jagdishan accepted a bribe of ₹2.05 crore in exchange for providing financial advice to help the Chetan Mehta Group retain undue control over the Trust’s governance.