HDFC Bank Defies Market Trend with Strong Q4FY25 Performance

Despite the broader market decline, HDFC Bank shares surged 2% on April 4 after the private sector lender reported strong Q4FY25 results. Investors reacted positively to the steady loan and deposit growth, as well as the bank’s cautious approach to balancing its post-merger credit-deposit ratio.

Loan Growth and Deposit Expansion Drive Confidence

As of March 31, 2025, HDFC Bank's gross advances stood at ₹26.43 lakh crore, marking a 5.4% year-on-year (YoY) growth from ₹25.07 lakh crore a year earlier. On a quarterly basis, loan growth was 4% compared to Q3FY25.

• The bank’s total deposits reached ₹27.14 lakh crore, up 14.1% YoY from ₹23.79 lakh crore in Q4FY24.

• Sequentially, deposits increased 5.9% from ₹25.64 lakh crore in Q3FY25.

• HDFC Bank also securitised ₹57,000 crore worth of loans in FY25, including ₹10,700 crore in Q4FY25 alone.

• Current Account Savings Account (CASA) deposits rose 5.7% YoY, standing at ₹8.29 lakh crore, supporting the bank’s funding stability.

The bank’s steady expansion in deposits and cautious loan growth aligns with its strategy to strengthen its balance sheet post-merger.

Strategic Focus on Credit-Deposit Ratio Post-Merger

HDFC Bank’s management has adopted a conservative approach to loan growth as it aims to stabilize its credit-deposit ratio following its merger with parent company HDFC Ltd.

• The bank has indicated that FY25 is a year of consolidation, with loan growth deliberately lagging behind industry averages.

• From FY26 onwards, HDFC Bank aims to match system-wide loan growth, with an expectation to outperform in FY27 once its balance sheet and deposit base are fully aligned.

This measured strategy ensures sustainable growth while maintaining financial stability in a challenging economic environment.

Stock Performance and Market Reaction

HDFC Bank’s share price surged 2%, reaching ₹1,830 during early trade on April 4.

• The stock is just 2.6% away from its all-time high of ₹1,880, hit in December 2024.

• It has gained 28% from its 52-week low of ₹1,430.15 recorded in May 2024.

• In the past year, the stock has risen 21%, reflecting investor confidence in the bank’s long-term growth prospects.

• In March 2025, HDFC Bank shares gained 5.5%, adding to the 2% rise in February, despite a 4% decline in January.

Final Thoughts

HDFC Bank's strong Q4FY25 performance highlights its resilience in a volatile market. With steady loan and deposit growth, a well-structured post-merger strategy, and investor confidence, the bank remains one of India’s top banking stocks.

Investors should closely watch its future loan growth trajectory and credit-deposit ratio adjustments, as these will play a crucial role in the bank’s long-term profitability and stock performance.

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