HDFC Bank Posts Double-Digit Growth in Deposits and Advances for First Quarter

Strong Quarter Across Key Metrics

HDFC Bank closed the first quarter of fiscal year 2027 with period-end deposits of approximately ₹31.7 trillion as of June 30, 2026, up from ₹27.6 trillion a year earlier. Gross advances climbed 15.4% year-on-year during the same period, according to the bank's provisional business update filed with regulators.

The results pushed shares up 3.6% to ₹829.85 on the National Stock Exchange on Monday, with the stock touching a high of ₹831.50 during the session. HDFC Bank led gainers on the Nifty 50 index as investors responded positively to the balance sheet expansion.

The lender's deposit mobilization reached ₹652 billion during the quarter, marking a 32% increase from the prior year period. This pace of deposit gathering supported the overall 14.7% year-on-year growth in total deposits and helped maintain the bank's loan-to-deposit ratio at relatively stable levels.

Brokerages Flag Momentum Shift

Bernstein maintained its outperform rating with a price target of ₹1,150, noting that the provisional figures reflect continued efforts to balance loan growth with deposit accumulation. The brokerage observed that CASA deposit growth improved, with the gap between total deposits and CASA deposits narrowing further during the quarter.

However, Bernstein pointed out that average loan and deposit balances grew at a slower rate than period-end figures, suggesting net interest income expansion may trail the headline numbers for advances and deposits.

Morgan Stanley kept its overweight stance with a ₹1,025 target, highlighting a perceptible pickup in year-on-year growth for both gross advances and managed assets. The brokerage said valuations remain attractive relative to historical ranges, and sustained improvement in fundamentals should support outperformance against peers.

Jefferies reiterated a buy rating with a ₹1,050 target, noting that loan growth accelerated to 15% year-on-year in the June quarter from 12% in March. The firm attributed the uptick to sector momentum and greater customer retention, though it flagged that assets-under-management growth came in lower at 12%.

Sector-Wide Acceleration

The quarterly update arrives as India's banking sector shows signs of broader acceleration. Loan and deposit growth picked up for most lenders on a seasonally adjusted year-on-year basis, with several institutions posting numbers above preliminary estimates.

Axis Bank continued to demonstrate volume momentum, with deposit growth significantly exceeding expectations. Kotak Mahindra Bank saw moderation in both loan and deposit growth, while IDFC First Bank maintained loan expansion above 20%. IndusInd Bank showed early signs of balance sheet stabilization alongside improved deposit momentum.

For HDFC Bank specifically, the pickup in year-on-year loan growth represents a meaningful shift that is likely to improve investor sentiment, particularly as the lender works through the integration challenges that followed its 2023 merger with HDFC Ltd.

What the Numbers Signal

The 15.4% advance growth broadly aligns with banking system trends, while the 14.7% deposit expansion appears to outpace industry averages. This positioning gives the bank room to continue growing its loan book without stretching its funding base or compressing net interest margins excessively.

The narrowing gap between total deposits and CASA deposits suggests the bank is regaining traction in low-cost funding, a critical factor for profitability in a competitive deposit market. CASA ratios have been under pressure across the sector as depositors chase higher yields on term deposits.

Period-end metrics tend to smooth out intra-quarter volatility, so the divergence between period-end and average balances noted by Bernstein warrants attention when the bank reports full first-quarter results. Average balances provide a clearer picture of how assets and liabilities behaved throughout the quarter, which directly affects net interest income calculations.

With three major brokerages reaffirming bullish calls and price targets ranging from ₹1,025 to ₹1,150, the market appears to be pricing in continued momentum through the fiscal year. The stock's 3.6% gain on Monday reflects confidence that HDFC Bank is regaining its footing after a period of slower growth tied to post-merger adjustments and regulatory scrutiny over deposit mobilization practices.

Investors will watch for full earnings details in the coming weeks to assess asset quality trends, fee income performance, and management commentary on credit demand and margin outlook for the remainder of the fiscal year.