HDFC Bank Shares Drop 3% After Q1 Report Shows Decline in Deposits and Loans – What’s Next?

HDFC Bank’s share price fell over 3% on Friday morning after the bank reported a drop in both loans and deposits for Q1.

• Loan Decline: Loans decreased by 0.8% from ₹25.1 lakh crore in March 2024 to ₹24.87 lakh crore in June 2024. The decline was due to a reduction in low-yield corporate loans, including those from the former HDFC Ltd.
  
• Yearly Growth: Despite the quarterly drop, loans grew 52.6% from ₹16.30 lakh crore compared to the same time last year.
  
• Deposit Growth: Deposits in Q1FY25 increased by 24.4% from ₹19,13,100 crore last year to ₹23,79,000 crore. However, deposits remained almost the same as in March 2024, which was ₹23,79,800 crore. Without the merger impact from July 2023, deposits grew by 16.5%.
  
• CASA Ratio Drop: The bank’s low-cost current and savings account (CASA) deposits ratio fell from 38.2% in March 2024 to 36.3% in June 2024. CASA deposits increased by 6.2% year-on-year to ₹8,63,500 crore but decreased by nearly 5% from the previous quarter’s ₹9,08,800 crore.
  
• Liquidity Improvement: The liquidity coverage ratio improved from 115% in the previous quarter to 123% in Q1.

Earlier this week, HDFC Bank shares hit a record high of ₹1,791.90 due to expectations of high passive fund inflows from a likely increase in its weightage in the MSCI index. The bank’s foreign institutional investor (FII) ownership dropped below 55%, which could boost the stock’s weight in the MSCI index.

At 9:17 am, HDFC Bank shares were trading 3.34% lower at ₹1,668.90 on the BSE.