Private Banks Show Mixed Performance in Q4 FY24; HDFC Bank Reports Modest Growth

Several private banks have shared their business updates for the fourth quarter of FY24, shedding light on advances and deposits as of March 2024. While this data is currently available for only a few banks, it offers valuable insights into sectoral trends.

Private banks like CSB Bank, Federal Bank, and Bandhan Bank experienced robust growth in advances compared to the previous quarter, achieving a loan growth of over 15 percent year-on-year.

In contrast, HDFC Bank saw a modest sequential growth in advances of just 1.6 percent at the end of March 2024, which is significantly lower than its usual quarterly rate.

Regarding deposits, HDFC Bank displayed an accelerated quarterly growth rate of 7.5 percent in Q4 FY24, a notable improvement compared to previous periods.

During the January-March 2024 period, HDFC Bank accumulated deposits amounting to Rs 166,000 crore, resulting in a positive shift in the CD (Credit-Deposit) ratio from 110 percent in December 2023 to 105 percent by March 2024.

Overall, the banking system sustained a robust credit growth, surpassing deposit growth notably in FY24. The credit expansion of 20 percent year-on-year was largely fueled by economic expansion and a focus on retail credit.

Retail loans and Non-Banking Financial Companies (NBFCs) emerged as the primary drivers of growth, whereas corporate lending remained subdued. Looking forward, credit growth is anticipated to range between 12-15 percent in FY25, fueled by increased government expenditure and private sector investment.

However, despite the buoyant credit growth, deposit growth has been trailing behind, with the banking system’s deposits growing by 13.7 percent year-on-year as of March 2024.

This disparity has led to an upward trend in the CD ratio, reaching 80 percent by February 2024, signaling a persistent liquidity shortfall in the system. However, elevated CD ratios may exert pressure on net interest margins (NIMs) in Q4 FY24 due to rising funding costs and stable lending rates.