For over a decade, HDFC Bank consistently outperformed industry growth rates in both deposits and advances, maintaining impeccable asset quality. Amid a landscape where other banks struggled with soaring non-performing assets (NPAs), HDFC Bank thrived, eventually surpassing ICICI Bank to become the largest private sector lender in India. Its net interest margin (NIM) remained stable in the range of 4.1-4.4 per cent.
However, in the year since mortgage financier Housing Development and Finance Corporation (HDFC) merged with the bank on July 1, 2023, the dynamics have shifted.
After the merger, HDFC Bank's loan book increased by over ₹6 trillion to ₹22.5 trillion, while deposits rose by ₹1.5 trillion to ₹20.64 trillion. HDFC was a deposit-taking non-banking financial company. The integration led to an unusual scenario where the bank's deposits were lower than its loan book, pushing the credit deposit ratio above 100 per cent, in contrast to the banking sector's average of 75.5 per cent at the time of the merger. The timing of the merger didn't help either. HDFC Bank had thought it would be able to replace HDFC's high cost borrowings by low-cost deposits. However, after the merger was announced in early April 2022, the interest rate environment shifted adversely. The Reserve Bank of India (RBI) started raising interest rates following the Russian invasion of Ukraine to control inflation. Between May 2022 and February 2023, the policy repo rate was increased by 250 basis points to 6.5 per cent, significantly altering HDFC Bank's cost dynamics.
Esta historia es de la edición July 01, 2024 de Business Standard.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor ? Conectar
Esta historia es de la edición July 01, 2024 de Business Standard.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor? Conectar
In the shadow of the mighty Annapurna
The unusual charm of trekking to Mardi Himal in the rainy season
Govt to organise Global IndiaAl Summit on July 3-4
The Ministry of Electronics and Information Technology will organise a global AI summit on July 3-4 to discuss issues related to artificial intelligence with India firmly committed to ethical and inclusive growth of this new-age technology.
ON THE BOIL
Why are milk prices rising when the supply is healthy?
Asset monetisation helped RIL create value: Morgan Stanley
Asset monetisation cycles have created 2-3x value for the shareholders of Reliance Industries in the last three decades, with each decade witnessing $60 billion in market cap creation, according to a report by the US-based financial services firm Morgan Stanley.
Weak steel prices rob metal sector's sheen
Slowdown in mining activity due to monsoon season will continue to remain a challenge in near-term, say analysts
MF Lite norms proposed for passive AMCs
The Securities and Exchange Board of India (Sebi) on Monday proposed to introduce a lighter version of mutual fund (MF) regulations for 'passive only' fund houses.
Clear skies ahead: Strong long-term gains for IndiGo
Long-term macro trends indicate growth in demand for air travel.
Regulator directs exchanges, other MIIs to levy same fees
The Securities and Exchange Board of India (Sebi) on Monday directed stock exchanges and other market infrastructure institutions (MIIs) to discontinue with the practice of levying slab-wise fee structures.
Niva Bupa files draft papers for ₹3,000 cr IPO
Niva Bupa Health Insurance has filed a draft red herring prospectus (DRHP) with the capital market regulator Securities and Exchange Board of India (Sebi) to raise ₹3,000 crore via initial public offering (IPO).
Mkts start July on strong note, log new highs
Indian equities extended their winning run during the first session of July by logging new highs on Monday, supported by gains in banking and technology stocks.
