Private Banks Witness Growth in Deposit Mobilization

In a change from the past, deposits at many private sector banks are now growing faster than loans. According to preliminary data provided by the seven largest private sector banks, deposit growth has been faster than credit growth over the last three months of fiscal year 24. The only banks that did not have this trend were AU Small Finance Bank (SFB) and South Indian Bank.

HDFC Bank, the biggest private bank in the country, said on Thursday that its total savings reached Rs 23.80 trillion as of March 31, 2024. This is up 26% year-over-year (YoY) and 7.5% quarter-over-quarter (QoQ). It also got better, going from 37.7% in Q3FY24 to 38.2% in Q4FY24 for the low-cost current account and savings account (CASA) share. Gross loans, on the other hand, rose 55% year over year and 2% month over month to Rs 25.08 trillion on March 31.

As worries about the bank’s ability to get deposits increased, shares of the bank finished the day 3.1% higher at Rs 1,527.90 each on the BSE. The lender said, “The numbers for the period ending March 31, 2024 include the operations of what used to be HDFC Limited, which merged with and became HDFC Bank on July 1, 2023. As a result, they cannot be compared to those of the same period the previous year.”

Jefferies said that the bank’s provisional Q4FY24 numbers showed three positive things. The first was strong deposit mobilization, with total retail deposit mobilization of Rs 1.3 trillion during the reporting quarter, compared to Rs 50,000 crore in the previous quarter and Rs 1.1 trillion in the same time last year. The credit-deposit ratio, also known as the loan-to-deposit ratio (LDR), has gone down because business loans have shrunk over the past few months.

“These things have helped bring down LDR by more than 600 bps (basis points) quarter over quarter, to 105%.” The LDR is still higher, but things are looking better. The LCR (liquidity coverage ratio) is not shared. The result for Q4FY24 is on April 20, and the direction of the margin will be very important to keep an eye on, the firm said.

Besides HDFC Bank, other private sector lenders also said that their deposit growth was faster than their loan growth from one quarter to the next in Q4FY24. On March 31, 2024, YES Bank’s total deposits rose 22.5% year over year and 10% quarter over quarter to Rs 2.66 trillion. Its total loans rose 14% year over year and 5% quarter over quarter to Rs 2.28 trillion. The bank’s CASA ratio went up from 30.9% in Q3FY23 to 30.9% in Q4FY24, both quarter over quarter and year over year.

Federal Bank’s total savings were Rs 2.52 trillion as of March 31, 2024, which is 18% more than the same time last year and 5% more than the previous quarter. That being said, the bank’s total loans went up 20% year over year and 5% quarter over quarter to Rs 2.12 trillion during that time. As of March 31, RBL Bank’s total deposits rose 22% year over year and 12% quarter over quarter to Rs 1.03 trillion. Its gross loans also rose 19% year over year and 5% quarter over quarter to Rs 85,640 crore. Bandhan Bank, which is based in Kolkata, also saw faster growth in deposits than in loans in Q4 compared to the same time last year.

A study by Emkay Global Financial Services says that bank savings will likely grow by 13.5% year over year in FY25, up from 12.6% year over year growth in FY24. It also said that credit growth could drop sharply from 21% in FY24 to 11.5% YoY in FY25.