Bengaluru, Jan 6, 2026, 01:45 IST — Market closed
- HDFC Bank shares fell 2.4% on Monday after its quarterly update showed loans grew faster than deposits.
- The lender reported December-end gross advances of about 28.44 trillion rupees and deposits of 28.59 trillion rupees.
- Focus now shifts to Jan. 17 earnings for clues on deposit traction, funding costs and growth guidance.
HDFC Bank Limited’s share price fell 2.4% on Monday after its December-quarter update showed loans grew faster than deposits, putting the lender’s funding position back in focus. The stock closed at 977.5 rupees, while the Nifty 50 ended down 0.30% and the Sensex slipped 0.38% amid IT weakness and fresh U.S. tariff worries. 1
The reaction matters now because deposit growth has lagged credit growth across India’s banking system, tightening funding and limiting how quickly lenders can expand loan books. India’s system loan-to-deposit ratio — a gauge of how much of deposits have been lent out — has climbed to an all-time high of 81.6%, Macquarie Research said. HDFC Bank has faced added scrutiny since its July 2023 merger with parent Housing Development Finance Corp brought in loans without a matching pool of deposits, even as peers such as Kotak Mahindra Bank and Bank of Baroda posted faster December-quarter loan growth. 2
HDFC Bank said period-end gross advances rose about 11.9% year-on-year to 28.44 trillion rupees as of Dec. 31, while deposits grew 11.5% to 28.59 trillion rupees. Its credit-deposit ratio — also known as the loan-to-deposit ratio — rose 60 basis points, or 0.60 percentage point, from the prior quarter to 98.5%, Business Standard reported. “LDR aspirations have to take a back seat if loan growth is a priority because deposits simply aren’t coming for the system,” said Suresh Ganapathy, head of financial services research at Macquarie Capital. 3
Average deposits in the October-December period rose 12.2% to 27.52 trillion rupees, while average advances under management — a broader loan measure — increased 9% to 28.64 trillion rupees, Business Standard reported. Average CASA deposits, current and savings accounts that are typically lower-cost funding for banks, rose about 9.9% to 8.98 trillion rupees. 4
For equity investors, the key question is whether HDFC Bank can keep growing loans without paying sharply higher rates for deposits, especially term deposits, which can lift overall funding costs. Monday’s slide suggests the market is leaning toward caution until it sees the full quarterly numbers and management commentary.
The risk is that a tighter funding environment squeezes net interest margin — the spread between what the bank earns on loans and pays on deposits — even if loan growth stays healthy. A sustained gap between systemwide loan and deposit growth can also keep banks from cutting deposit rates quickly, leaving profitability more exposed if competition intensifies.
Technically, the stock’s Monday range left traders watching whether it can hold above the session low near 976 rupees, while the 1,000-rupee area and the day’s high around 1,006 rupees mark the near-term ceiling. 5
The next clear catalyst is Jan. 17, when HDFC Bank is due to report December-quarter results. Investors will watch deposit mobilisation trends, the trajectory of the loan-to-deposit ratio and any guidance on loan growth and margins for the rest of the fiscal year and into FY27. 6
