HDFC Bank will flourish advances slower than deposits: CEO

HDFC Bank, the country’s largest private lender, will grow its advances at a slower pace than deposits as it aims to achieve profitable growth without compromising asset quality. The lender will also work to reduce its credit-to-deposit ratio to pre-merger levels, its managing director and chief executive officer Shashidhar Jagadeesan said in a message to shareholders.
It’s been a little over a year since mortgage lender HDFC merged with HDFC Bank. After the merger, the bank received a larger pool of mortgage loans in its portfolio, but a much smaller amount of deposits, pushing its CD ratio above the 100% mark. Before the merger, the bank’s CD ratio was 85% and it had maintained the ratio at 85-87% over the long term.
“Our endeavor is to bring the credit-to-deposit ratio back to pre-merger levels and our focus will be on maintaining adequate liquidity buffer, repayment of EHDFC borrowings as they mature, taking into account any prepayment opportunities that may arise. Evaluation will also be included pursuing advantageous sources of lending,” he said. “We will continue to deliver profitable growth without compromising asset quality,” he said.
As the banking sector is struggling to raise low-cost deposits, the bank will focus on raising broader deposits, leveraging its distribution strengths. The Bank is taking important steps to transform its digital channels into a holistic platform. Its mobile and net banking platforms are set to introduce many new features.
“Looking ahead, I am excited about the opportunities ahead as we continue our journey towards becoming a future-ready digital bank,” he said. “Our commitment to providing exceptional experiences and inclusive banking services will be driven by the adoption of new age technologies focusing on scalability, flexibility and security while building the bank for the future,” he said.
In his message, HDFC Bank Chairman Atanu Chakraborty said the bank has completed one year of the merger and the process of integration across all dimensions of the business has been completed seamlessly and efficiently.
“As the country’s growth story unfolds, we are poised to benefit through this historic combination,” he said.
Chakraborty said HDFC Bank’s financial performance last year demonstrated resilience amid challenges, with market share growth in deposits as well as advances. He said the bank ensured prudent risk management and asset quality in the portfolio.