HDFC Bank Q4 FY25 Update: Deposits Strong, Loans Slow

The big picture from the quarterly update

HDFC Bank’s latest business update highlighted a familiar theme since its merger with HDFC Ltd: liabilities are growing faster than the loan book, and the bank is using that gap to normalise its elevated credit-to-deposit ratio. For Q4 FY25, deposits rose at a much quicker pace than advances, even as retail and commercial and rural banking (CRB) continued to expand.

The update, dated 24 April 2026, also pointed to securitisation as a balance sheet management tool. Alongside the Q4 FY25 numbers, the broader set of data in the same context referenced the March 2026 quarter, where the bank reported stronger year-on-year growth in both deposits and advances, as well as a slight improvement in its credit-to-deposit ratio.

Q4 FY25: Deposits outpace advances

For Q4 FY25, HDFC Bank reported period-end deposits of ₹27.15 trillion, up 14.1% year-on-year and 5.9% sequentially. Over the same period, gross advances were ₹26.44 trillion, up 5.4% year-on-year and 4% sequentially.

Average deposits also showed solid traction. The bank reported average deposits of ₹25.28 trillion, up 15.9% year-on-year and 3.1% sequentially, signalling that deposit mobilisation remained broad-based across customer segments.

CASA growth remains positive, but slower than total deposits

The update showed current account savings account (CASA) deposits at ₹8.29 trillion, up 5.7% year-on-year and 1.4% sequentially. This indicates CASA continued to grow, though the pace was lower than overall deposit growth.

In the March 2026 quarter data included in the same material, the bank also reported average CASA deposits of ₹9.184 trillion, up 10.8% year-on-year (from ₹8.289 trillion for the March 2025 quarter). This points to improving average balances, even as the mix between CASA and term deposits remained a market focus amid intense competition for deposits.

Loan mix: Retail and CRB hold up better

Even with modest overall advance growth in the Q4 FY25 update, the underlying mix was stronger in consumer and rural-linked portfolios. Retail loans increased 9% year-on-year, while the CRB portfolio rose 14% year-on-year.

Corporate advances were described as relatively flat, consistent with the bank’s approach of moderating concentration risk and focusing on more granular credit portfolios. The bank also said it is strategically moderating loan expansion to manage its elevated credit-to-deposit ratio after the merger.

Securitisation as a balance sheet lever

HDFC Bank securitised loans worth ₹0.107 trillion in Q4, taking FY25 securitisation to ₹0.57 trillion. The update positioned this as part of a broader strategy to manage balance sheet growth and capital efficiency.

While securitisation does not change underlying demand for credit, it can help manage reported growth and balance sheet ratios during periods when a bank is consciously pacing disbursals or prioritising funding stability.

March 2026 quarter: Faster loan growth, deposits still lead

Alongside the FY25 update section, the broader information set referenced HDFC Bank’s March 2026 quarter performance, where growth looked firmer. Total advances increased 12.1% year-on-year to ₹29.37 trillion, and deposits rose 14.4% year-on-year to ₹31.05 trillion.

The same March 2026 data set also mentioned period-end gross advances of roughly ₹29.6 trillion and period-end deposits of about ₹31.055 trillion, both pointing to a year where deposit growth remained ahead of loan growth.

Profitability, margins, and funding costs

For the March 2026 quarter, standalone net profit was reported at ₹0.19221 trillion, up 9.11% year-on-year, while provisions fell 18%. However, net interest margin (NIM) slipped to 3.53% from 3.7% a year earlier.

The margin pressure was attributed in the provided context to Reserve Bank of India repo rate cuts in late 2025, as well as higher funding costs and competition for deposits. These are sector-wide dynamics, but they matter more for large lenders when deposit pricing tightens.

Credit-to-deposit ratio and post-merger normalisation

A key operating metric being tracked is the credit-to-deposit ratio. The March 2026 quarter data cited a credit-to-deposit ratio of 94.6%, improving from 98.6% in the previous quarter.

The bank’s stated strategy is to match system-wide loan growth in FY26 and surpass it in FY27. The focus, as described, remains on deposit mobilisation and credit quality while easing the ratio back towards pre-merger levels.

Valuation and peer comparisons mentioned

The context also included comparative valuation and peer growth datapoints. HDFC Bank was cited as trading at a price-to-book (P/B) value of 2.2 times, compared with Kotak Mahindra Bank at 3.0 times.

On business momentum, Kotak Mahindra Bank was referenced as reporting Q4 FY26 loan and deposit growth of 16.2% and 14.7% respectively, while HDFC Bank’s figures in the same comparison set were 12.1% loan growth and 14.4% deposit growth for the March 2026 quarter.

Key numbers at a glance

What investors are likely to watch next

From the information provided, the near-term focus areas are clear: the pace of deposit mobilisation, the trajectory of NIM after the reported contraction to 3.53%, and the continued glide path in the credit-to-deposit ratio.

Separately, the bank is seeking shareholder approval to raise up to ₹0.6 trillion via bonds to fund infrastructure loans, as cited in the same context. Any further detail on timelines and pricing would matter for funding costs and balance sheet planning.

Conclusion

HDFC Bank’s Q4 FY25 update showed strong deposit growth alongside slower advance growth, consistent with a deliberate post-merger strategy to normalise the credit-to-deposit ratio. The March 2026 quarter figures referenced in the same context showed improved loan growth, deposits still leading, and a modest improvement in the ratio. The next set of updates will be tracked for whether deposit momentum stays strong enough to support the bank’s stated goal of matching system loan growth in FY26 and exceeding it in FY27.