MUMBAI, Oct 19 (Reuters) – HDFC Bank (HDBK.NS), India’s largest private lender, has launched a new tab to increase its deposit-to-deposit ratio (LDR) from its pre-merger level in the next two to three years. the company’s chief financial officer said on Saturday.
Srinivasan Vaidyanathan said in a post-earnings conference call that the bank’s LDR was around 86-87% before the merger with parent company Housing Development Finance Corporation in July 2023, but after the merger it rose to 110%. He said he did.
Vaidyanathan said it would take the bank two to three years “to reach the high 80s.”
LDR is an important metric for banks, helping them assess their liquidity situation by measuring whether they have enough deposits to fund loan expansion.
This ratio has continued to rise even after the merger, reaching approximately 100% as of the end of September.
Vaidyanathan told reporters on a conference call that the bank securitized 190 billion rupees ($2.26 billion) in loans in the July-September period, without providing details. “This process will take four to five years.”
Loan securitization involves packaging loans into securities and selling them to investors.
With this merger, HDFC Bank has added a large amount of loans to its portfolio, but the amount of deposits is much lower and it is under pressure to either increase the pace of deposit raising or slow loan growth.
In the July-September period, HDFC Bank’s total loans increased by 1.3% compared to the April-June period, while deposits increased by 5.1% to Rs 25 trillion.
Vaidyanathan said the bank aims for slower loan growth than the overall banking system this fiscal year and faster loan growth than the system level next fiscal year.
Earlier in the day, HDFC Bank announced that its standalone net profit for the July-September period rose 4% from the previous quarter to Rs 168.21 billion.
That beat analysts’ average estimate of Rs 164.37 billion, according to LSEG data.
Net interest income (the difference between interest income and interest expense) rose nearly 1% quarter-on-quarter to Rs 301.1 billion.
The bank’s core net interest margin was 3.46% on total assets and 3.65% on interest-earning assets, compared to 3.47% and 3.66%, respectively, in the previous quarter.
The total non-performing assets ratio at the end of September was 1.36%, up from 1.33% three months ago.
(1 dollar = 84.0650 Indian rupees)
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Report by Siddhi Nayak. Editing: William Mallard and Jason Neely
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