HDFC Bank's recovery gains momentum with lending expansion

HDFC Bank reported better-than-expected results driven by nearly 12% year-on-year loan growth and a 28.45 trillion rupee loan book, and its CFO said the bank expects loans to expand faster than the overall banking system in the next financial year.

HDFC Bank posted better-than-expected results on healthy loan growth, as mortgage demand and retail lending recovered after a post-merger slowdown. The bank's enlarged loan book has stabilized in the past two quarters following its 2023 merger with Housing Development Finance Corp. Broader credit demand in India has been supported by a cumulative 125 basis points of rate cuts and reductions in consumption taxes. Those shifts have lifted disposable incomes and helped big-ticket retail purchases. Key details: - HDFC's loan book stood at 28.45 trillion rupees at the end of December and grew nearly 12% year-on-year. - Chief Financial Officer Srinivasan Vaidyanathan said the bank expects loans to expand faster than the overall banking system in the next financial year. - The article notes ICICI Bank had taken market share last year but reported lower October–December profit due to higher one-time provisions. - Analysts cited in the piece said HDFC's net interest margins had "troughed" and highlighted strong asset quality and high operating leverage. - The article reports HDFC and ICICI shares rose about 13% and 11% respectively over the past year, while state-run banks led a 23% rise in the Nifty Bank index. Summary: HDFC's results indicate it is regaining momentum in core retail and SME lending as merger-related pressures ease. The bank projects loan growth to outpace the wider system in the coming financial year, and analysts point to improving margins and asset quality. Increased investment from overseas lenders is cited as a factor likely to intensify competition for funding in India.