HDFC Bank, India’s largest private sector lender by assets, has reported robust growth in its Q1 FY26 business update, with significant expansion in deposits and advances, highlighting sustained retail credit demand and strong corporate lending momentum despite a high interest rate environment.
Key Highlights
- Deposits rose by 19.4% YoY to ₹23.79 lakh crore as of June 30, 2025, compared to ₹19.92 lakh crore a year ago.
- Advances grew by 52.6% YoY to ₹25.08 lakh crore, including the merged HDFC Ltd portfolio, versus ₹16.44 lakh crore in June 2024.
- Sequentially, deposits increased by 1.9% and advances rose by 1.5% over Q4 FY25.
HDFC Bank Q1 FY26 Snapshot
| Particulars | June 2024 (₹ lakh cr) | June 2025 (₹ lakh cr) | YoY Growth (%) |
|---|---|---|---|
| Deposits | 19.92 | 23.79 | +19.4 |
| Advances | 16.44 | 25.08 | +52.6 |
| CASA Ratio | 45.2% | 40.4% | – |
| Retail Loans | NA | ₹10.18 | – |
| Corporate & Wholesale Loans | NA | ₹10.67 | – |
| Commercial & Rural Banking | NA | ₹3.31 | – |
Note: Advances growth includes HDFC Ltd’s home loan portfolio post merger effective July 1, 2024.
Segment-Wise Growth Analysis
- Retail Lending:
Strong demand across home loans, personal loans, auto loans, and credit cards. HDFC Bank has deepened cross-selling within its merged home loan customer base, driving incremental disbursements. - Corporate & Wholesale Lending:
Continued expansion in working capital loans, term financing, and structured credit to blue-chip corporates, with selective exposure to high-rated NBFCs and infrastructure projects. - Commercial & Rural Banking:
Robust growth driven by agriculture value chain financing, MSME loans, and microfinance lending, supporting financial inclusion targets.
CASA Performance
The bank’s CASA ratio declined to 40.4% from 45.2% YoY, reflecting an increase in term deposits as depositors locked into higher rates amid tightening liquidity conditions.
| Deposit Composition | June 2025 (%) |
|---|---|
| Current Account | 12.2 |
| Savings Account | 28.2 |
| Term Deposits | 59.6 |
The higher term deposit mobilisation has ensured stable liability growth to fund expanding credit demand.
Analyst Perspectives
- Jefferies India:
“HDFC Bank’s deposit accretion remains strong despite intense competition. Advance growth is robust, benefiting from merger synergies and sustained retail momentum.” - Nomura India:
“We expect net interest margin pressures to moderate in H2 FY26 as deposit costs stabilise. The bank’s superior asset quality and diversified loan book remain key positives.”
Peer Comparison: Q1 FY26 Advances
| Bank | Advances Growth (%) | Total Advances (₹ lakh cr) |
|---|---|---|
| HDFC Bank | +52.6 | 25.08 |
| ICICI Bank | +17.2 | 12.86 |
| Axis Bank | +16.8 | 9.85 |
| Kotak Mahindra Bank | +13.4 | 3.83 |
| SBI | +13.2 | 36.45 |
HDFC Bank’s advances growth outpaces peers, driven by merger effect and organic growth combined.
Asset Quality Outlook
The bank will report detailed Q1 financials including asset quality ratios, NIM, profitability, and credit costs later this month. Analysts expect:
- Stable GNPA ratio around 1.3-1.4%, aided by prudent underwriting.
- Low credit costs despite merger-led portfolio expansion.
- Incremental slippages largely from SME and rural microfinance portfolios but within manageable limits.
Strategic Initiatives
- Merger Integration:
Seamless integration of HDFC Ltd’s home loan book with core banking systems completed in Q1, enabling unified cross-selling. - Digital Expansion:
Launch of digital personal loan, agri loan, and merchant financing products on revamped HDFC Bank app. - Rural Market Focus:
Expanded branch presence in Tier-3 and rural locations to strengthen financial inclusion and retail deposit mobilisation. - International Expansion:
Applied for branch licence in GIFT City IFSC to tap offshore banking and corporate treasury flows.
Market Reaction
HDFC Bank shares closed 0.7% higher at ₹1,796 on NSE on July 4, reflecting positive investor sentiment after strong business updates and merger synergy benefits.
Growth Outlook FY26
| Parameter | Bank Guidance |
|---|---|
| Advances Growth | 12-15% organic + merger integration gains |
| Deposit Growth | 14-16% |
| Net Interest Margin | 3.4-3.6% |
| Cost-to-Income Ratio | 38-40% |
| GNPA Ratio | Stable at ~1.4% |
Management expects continued growth momentum supported by macroeconomic stability, rising retail credit penetration, and infrastructure capex-led corporate credit demand.
Economic Implications
- Credit-Led Growth:
HDFC Bank’s robust advances expansion reflects continued revival in consumer demand and private sector investment. - Deposit Mobilisation:
Healthy deposit growth eases systemic liquidity concerns amid RBI’s tight monetary policy stance.
Conclusion
HDFC Bank’s Q1 FY26 update underscores its dominant position in India’s banking sector, with deposits nearing ₹24 lakh crore and advances crossing ₹25 lakh crore for the first time post-merger. Analysts see merger benefits, retail leadership, and strong asset quality supporting earnings growth and market share expansion in FY26.
Disclaimer: This news report is for informational purposes only and does not constitute financial, investment, or banking advice. Readers are advised to consult certified financial analysts, official stock exchange filings, and HDFC Bank’s investor communications before making any business or investment decisions. The publication is not responsible for decisions taken based on the information presented.
