HDFC Bank will continue to aggressively add branches and mobilise deposits even as it awaits all regulatory clearances for the merger of parent, HDFC Ltd, with itself.

The country’s largest private bank will be in hot pursuit of deposits for the next three to five years. In FY23, the lender added Rs 3.2 lakh crore to its deposits with a year-on-year growth of 21%. For the banking sector, growth was lower at below 10%.

Mobilising deposits will be an important goalpost as the bank’s credit-to-deposit ratio after the merger will be more than 100%. Mortgage lender HDFC has a loan book of Rs 6 lakh crore, a substantial part of which is funded by wholesale borrowings.

In the financial year ended March 2023, HDFC Bank had a total deposit base of Rs 18.88 trillion while the loan book stood at over Rs 16 trillion.

“In FY18, we got three million customers in liability (deposit-holding) customers.  In FY19, this rose to four million and jumped to six million in FY20 and seven million in FY21. The figure increased to 8.5 million in FY22 and 10.5 million in FY23.  We expect to continue with that speed in FY24,” HDFC Bank chief financial officer Srinivasan Vaidyanathan said while addressing a post-earnings call.

A crucial part of the bank’s strategy is thus to expand its branch network. The plan is to add branches in FY24 “at the speed at which we have grown in the last 15-18 months”, said Vaidyanathan.

In FY23, the private lender opened close to 1,500 branches. As of 31 March 2023, the total number of branches rose to 7,821 from 6,342 a year ago.

Branch expansion has helped the bank to garner more deposits. In the quarter ended March 2023, the bank garnered Rs 1.5 trillion in deposits.

Meanwhile, HDFC Bank reported 19.8% year-on-year growth in net profit to Rs 12,047.5 crore for the fourth quarter ending 31 March 2023 amid drop in provisions.

Net interest income (NII) grew 23.7% to Rs 23,351.8 crore in the fiscal fourth quarter. The core net interest margin was at 4.1 % on total assets and 4.3% based on interest-earning assets.

Provisions and contingencies dropped to Rs 2,685.4 crore versus Rs 3,312.4 crore in year-ago quarter.

The lender’s asset improved with gross non-performing asset (NPA) falling to 1.12% of gross advances in Q4FY23 versus 1.23% in the preceding quarter and 1.17% in the year-ago period. The Q4FY23 gross NPA is excluding 0.94% NPAs in the agricultural segment.

Net non-performing assets were at 0.27% of net advances as of 31 March 2023.

Total deposits grew 20.8% YoY to Rs 1,883,395 crore in Q4FY23. CASA deposits rose by 11.3% and amounted to 44.4% of the bank’s total deposits. Savings account deposits stood at Rs 562,493 crore and current account deposits at Rs 273,496 crore. Time deposits were at Rs 1,047,406 crore, an increase of 29.6% over the year-ago period.

Total advances jumped 16.9% YoY to Rs 1,600,586 crore in Q4FY23. Domestic retail loans grew 20.8%, commercial and rural banking loans saw a rise of 29.8%, and corporate and other wholesale loans increased by 12.6%. Overseas advances constituted 2.6% of total advances.

The total balance sheet stood at Rs 2,466,081 crore, posting a growth of 19.2% compared to Rs 2,068,535 crore a year ago.

The bank has announced a dividend of Rs 19 per equity share for the financial year FY23. 

HDFC Bank expects to complete the merger by July. "We think, from a timing point of view, it is June or July, possibly in July, which is where we think the timeframe is as we speak, given where we are on various things," Vaidyanathan told analysts after announcing the January-March 2023 quarter results.

The bank has applied to the Securities and Exchange Board of India (Sebi) and the Insurance Regulatory and Development Authority of India (Irdai). The bank will have to finally circle back to the Reserve Bank of India for a final nod, Vaidyanathan said.

The HDFC-HDFC Bank merger was first announced in April last year. The merger  received the approval of the National Company Law Tribunal (NCLT) on 28 February.