HDFC Bank managing director and CEO Sashidhar Jagdishan said that the bank is now poised for faster growth after having successfully navigated the merger with erstwhile HDFC Ltd and repositioned the balance sheet.

As part of the strategic plan post-merger, the bank has grown its deposits much faster while slowing down its loan book. Now the time has arrived to change gear and put the loan book on a faster engine.

"I believe we have successfully navigated the merger and the bank is now positioned for faster growth. The reset in loan growth and the consolidation of the merger have resulted in a much stronger bank, that is now poised to capitalise further on growth opportunities," Jagdishan said in a message to stakeholders.

The bank’s deposits have grown 2.5 times faster than loans. The aim in FY26 is to pace up its loan growth to bring it on par with the industry and then ensure that it marches ahead of the system next year.

"We are confident of growing our advances on par with the system in FY26 and higher than the system in FY27," Jagdishan stated in the bank’s annual report.

In the previous fiscal, the bank had a different loan growth strategy. Advances grew 5.4% in FY25 to Rs 26,19,609 crore while deposits paced faster at 14.1% to Rs 27,14,715 crore. The bank's balance sheet grew by over 8% to Rs 39,10,199 crore while net profit rose 10.7% to Rs 67,347.4 crore in March 2025. The results of FY25 represented the first full year of operation since the merger on 1 July 2023.

"We consciously calibrated our loan growth in FY25 to reposition the balance sheet. Aided by appropriate and disciplined pricing and focused on quality growth, we were successful in achieving the same," he said.

The bank's deposits have grown significantly ahead of the industry average. With just 5% of the total branches in the country, HDFC Bank holds 11% of the total banking deposits. During the last financial year, the bank held 14.6% of all new deposits in the banking system.

Central to the strategy of slowing down the engine on the loan side while stepping up the deposits was the main objective of bringing down the credit-to-deposit (CD) ratio, which had shot up to an uncomfortable high of 110% at the time of merger.

The bank took steps to reduce the CD ratio first to around 95% and then make it slide further to a range between 85% and 90% in the medium term. The ideal is to have the CD ratio at around 87%-88%, the level at which HDFC Bank used to operate in before the merger. 

The lender also made efforts to reduce its dependence on high-cost borrowings. Jagdishan said the bank has not been aggressive on pricing, whether for loans or deposits.

By the end of FY 2024-25, the percentage of high-cost borrowings fell to 14% and the CD ratio to 96%.

Besides growing the loan book, the other task for Jagdishan this year will be to increase the share of low-cost CASA (current account savings account) deposits. The bank’s CASA ratio had fallen by 4% to around 38% at the time of merger with mortgage financier HDFC Ltd in July 2023. After aggressively mobilising deposits last year to improve the CD ratio, the challenge now will be to increase the CASA share, which has slipped to 34% of total deposits as of 30 June 2025. 

HDFC Bank’s focus back on loan growth is coming at a time when the Reserve Bank of India (RBI) has cut interest rates, lowered the cash reserve ratio (CRR) and ensured ample liquidity in the banking system. The demand for credit, however, has yet to pick up despite corporates enjoying benign interest rates.

Jagdishan stated the successful integration of merger synergies, improved CD ratio and robust deposit mobilisation as major positives for the bank.

"To borrow a cricketing analogy, last year we focused on taking singles. Now, we're ready to go for the boundaries," he said.