HDFC Bank FY24 Annual Earnings Summary
3 quarters covered · ₹70,922 Cr revenue · ₹44,328 Cr PAT · 0.0% average EBITDA margin.
Quarter-by-quarter progression
Management promises made during the year
Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q2 FY24Current-quarter commentary contains related evidence, but delivery is not conclusive enough for a clean met verdict.
Q3 FY24Risks flagged during the year
Management is investing aggressively in branches, relying on benign credit costs to fund the investment. If credit costs revert to historical mean (90-110 bps), profitability could be pressured.
Q3 FY24 · highLDR above 110% and LCR at 110% limit balance sheet flexibility; system liquidity turned negative for the first time in 3.5 years.
Q3 FY24 · highDeposit growth of 1.9% QoQ lagged loan growth of 4.9%, forcing reliance on borrowings and investment sales.
Q1 FY24 · mediumQoQ deposit growth was only 1.6% (INR 30,000 crore), significantly below system growth of ~5%, raising concerns about market share loss.
Q1 FY24 · mediumThe merged entity's credit-deposit ratio is ~109%, well above the bank's historical ~84%. Bringing it down will take 3-4 years and may constrain growth.
Q2 FY24 · mediumCurrent credit costs at 49 bps are below historical mean of ~80-100 bps; reversion could pressure profitability.
Q2 FY24 · mediumThe 25 bps drag from ICRR and debt-funded liquidity may persist longer than expected, delaying NIM recovery.
Q3 FY24 · mediumFY24 branch additions likely to be ~1,000 vs original target of 1,500, potentially limiting deposit mobilization.
Q3 FY24 · mediumCASA ratio declined and term deposit rates remain elevated; management did not commit to a timeline for margin improvement.
Q2 FY24 · lowThough management downplays risk, the inherited non-retail book has some tail risk of further slippage.
What changed through the year
Q1 FY24 · Loan growth of 17-18% for FY24
Management expects full-year loan growth in the 17-18% range, consistent with historical doubling every 4-5 years.
Q1 FY24 · ROA in 1.9-2.1% range
Management reiterated confidence in sustaining ROA between 1.9% and 2.1% on a merged basis.
Q1 FY24 · Retail deposit accretion of ~INR 1 trillion per quarter
Management indicated that the capacity built should enable retail deposit accretion of around INR 1 trillion per quarter, though Q1 was seasonally lower.
Q2 FY24 · ROA maintained at 1.9%-2.1%
Management reiterated its ability to maintain return on assets in the 1.9%-2.1% range, consistent with historical performance.
Q2 FY24 · Construction finance book to grow steadily
The bank plans to grow the construction finance portfolio, which will support top-line and margin recovery.
Q2 FY24 · NIM recovery over time via better mix
Margins are expected to improve as the bank substitutes high-cost debt with deposits and shifts loan mix towards retail.
Q3 FY24 · Deposit growth to outpace loan growth by 300-400 bps
Management expects deposit growth to exceed loan growth by 300-400 basis points to reduce the LDR over time.
Q3 FY24 · Cost-to-income ratio to progressively decline to mid-30s
The bank aims to reduce cost-to-income from ~40% to mid-30% over the medium term through digital efficiencies and margin improvement.
Q3 FY24 · Branch network to reach ~1,000 additions in FY24
Revised target from 1,500 to ~1,000 branches for FY24, with 570 branches in pipeline.
Q3 FY24 · Cross-sell metrics to be disclosed from next quarter
Management will start reporting penetration of savings accounts, credit cards, and consumer durable loans among new mortgage customers.