The bank slowed its retail disbursements which were down 30% sequentially, reflecting the impact of the second Covid wave. The continued weakness in the retail segment led to retail segment’s share in total loans slipping down to 45% from 47% in June quarter last year.
“Any escalation in the Covid cases and lockdowns could delay retail loan growth recovery,” said said Gautam Chhugani, director – financial at Bernstein research. “We expect more clarity about the recently completed technology audit and digital banking efforts of the bank when it reports quarterly earnings. Management commentary on growth and provisioning outlook will also be key.”
Non-retail loans, including commercial and rural loans grew at a healthy pace of 25% YoY and 11% YoY respectively. In which corporate loan book grew 17% YoY.
Analysts say the retail growth has remained relatively subdued due to the second Covid wave-led disruption, the bank’s conscious stance in the vehicle finance and the personal loan category and continued suspension of new card business by the RBI.
“We believe that HDFC Bank’s credit momentum has moderated a bit in Q1, dragged mainly by continued weakness in the retail segment” said Anand Dama, senior research analyst,
. “The bank has well-managed its asset quality after the second Covid wave, but new stress formation in commercial vehicle, SME and personal loans due to back-to-back disruptions will be a key monitorable.”
For the private lender deposit growth remained moderate at 13% YoY, but CASA deposits continued to register strong growth at 28%. HDFC Bank saw traction on retail term deposits during the quarter as total retail deposits grew 17% YoY.
“We can clearly see the strong growth in CASA numbers continuing, that is helping banks like HDFC Bank to lower their cost of funds and compete heavily in the corporate banking space through a finer pricing of the loans,” said Suresh Ganapathy, associate director, Macquarie Capital.
Meanwhile, peer private lender
too reported its headline numbers with overall loans growing at a slow pace of 7% over last year. It’s overall book degrew by a percent sequentially, taking total advances to Rs 2.11 lakh crore at the end of the June quarter.
Deposits grew at a strong pace growing at 26% over the June quarter last year. It’s total deposits now stand at Rs 2.67 lakh crore while CASA ratio came in at 42.1%
