HDFC Bank advances in Q4 grow 21% to Rs 9.93 lakh crore

Share of HDFC Bank rallied nearly 8% in Tuesday’s trade after the private lender has said its advances aggregated to Rs 9.93 lakh crore as of March 31, marking a growth of about 21% as compared to Rs 8.19 lakh crore a year ago and Rs 9.36 lakh crore on December 31, 2019.

The bank’s deposits aggregated to Rs 11.46 lakh crore, clocking a growth of 24 per cent as compared to Rs 9.23 lakh crore as of March 31, 2019 and Rs 10.67 lakh crore on December 31, 2019.

HDFC Bank said it purchased Rs 5,479 crore of loans from parent mortgage lender HDFC during the quarter.

The CASA (current account saving account) ratio stood at 42% as of March 31 as compared to 42.4% a year ago and 39.5% on December 31 last year, the bank said in a statement.

During the quarter ended March 31, the bank purchased loans aggregating ₹5,479 crore through direct assignment route under home loan arrangement with Housing Development Finance Corporation (HDFC).

Lenders and finance companies are facing stiff challenges from the current scenarios.

The rapid and widening spread of COVID-19 deteriorating global economic outlook, falling oil prices and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets.

We believe large private banks are better than NBFCs as balance sheet management and lower growth concerns stay. Secured loan based entities are more preferable than unsecured in the current environment

Shutdown and restriction undertaken amid outbreak of Covid-19 could impact credit offtake, with repayment in MSME and retail segment at risk.

Consequently, banks with higher exposure to MSMSE segment remain more vulnerable.

In the near term, pace of advances is expected to remain benign, especially in the MSME and retail segment.

However, as the situation normalises, the large industrial sector is poised to grow steadily compared to small & medium industry.

HDFC Bank has efficiently focused on retail business and has garnered strong liability franchise to yield superior profitability over the years. Seasoned portfolio and management experience led to higher than industry advances growth at 24% CAGR in FY08-19

Enriched customer experience, strong network of 5345 branches and focus on digitisation have enabled it to build a strong liability franchise with CASA comprising over 40% of deposits.

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