HDFC Bank’s share price saw a decline of over 3% in early trading on Friday following the release of its Q1 business update. The update revealed a decrease in both advances and deposits compared to the previous quarter.
The bank’s advances dropped by 0.8% to ₹24.87 lakh crore in June 2024 from ₹25.1 lakh crore in March 2024. This decline was primarily due to the reduction of low-yielding corporate loans, including those from HDFC Ltd.
Despite the quarterly decrease, the bank’s advances showed a significant increase of 52.6% on a year-on-year basis, reaching ₹16.30 lakh crore.
Deposits in Q1FY25 stood at ₹23,79,000 crore, marking a 24.4% growth from the previous year. The bank reported a stable deposit level compared to March 31, 2024, at ₹23,79,800 crore.
Excluding the impact of a merger in July 2023, HDFC Bank stated that its deposits grew by 16.5% compared to June 30, 2023.
The bank’s low-cost deposits, known as current and savings accounts (CASA), saw a decrease in ratio to total deposits, falling to 36.3% in June 2024 from 38.2% in March 2024.
CASA deposits as of June 30 increased by 6.2% year-on-year, reaching ₹8,63,500 crore, but declined by nearly 5% from the previous quarter.
HDFC Bank also reported an improvement in liquidity coverage ratio in Q1, rising to 123% from 115% in the previous quarter.
The recent surge in HDFC Bank’s share price to a record high of ₹1,791.90 on the BSE was driven by expectations of increased passive fund inflows due to a likely weight increase in the MSCI index.
The bank’s latest shareholding pattern showed a decrease in foreign institutional investors’ ownership to below 55%, which is anticipated to boost HDFC Bank stock’s weightage in the MSCI index, leading to higher passive inflows.
As of 9:17 am, HDFC Bank shares were trading 3.34% lower at ₹1,668.90 on the BSE.