Early on Friday, HDFC Bank shares saw a nearly 4% decrease due to a dismal business report for the quarter that ended on June 30.
As of 10:17 am, HDFC Bank shares were down 3.97% on the Bombay Stock Exchange (BSE) at Rs 1,658.05.
The bank has had strong performance in previous years, so this decline—which is the result of a decrease in loans and stagnating deposit growth—is a setback.
In the first quarter, HDFC Bank recorded a 0.8% sequential decline in gross advances.
Deposits at the bank did neither increase nor decrease from the previous quarter’s level, which was below the bank’s performance during the same period last year.
The flat rise in deposits was seen by Jefferies analysts as “slightly disappointing,” which added to the bearish outlook for the bank’s stock.
Although just a small number of deposits were added, the merger of HDFC Bank with its parent non-bank lender last year added a sizable pool of mortgage loans to the bank’s portfolio.
HDFC Bank has deposits of Rs 23.79 lakh crore and advances of Rs 24.87 lakh crore at the end of June.
Piran Engineer, a senior research analyst at CLSA, noted that the focus on repaying HDFC’s liabilities resulted in loan growth taking a back seat, leading to a 1% quarter-on-quarter decline.
The low-cost current and savings account (CASA) deposits, which dropped to Rs 8.64 lakh crore in the quarter, showed a notable 5% sequential reduction during the quarter, which was a major reason in the bank’s performance problems.
A reduction in this sector may have an effect on the bank’s overall cost effectiveness and profitability. It should be highlighted that CASA deposits are essential for banks since they offer a cheap source of funding.
The market was immediately impacted by the disappointing quarterly update, and HDFC Bank became the biggest loser on the Nifty50 index.
The benchmark indices fell down with the fall; earlier this week, they had several times reached all-time highs.