HDFC Bank Ltd.Growth Pedal Down, Margin Recovery Takes Time

HDFC Bank's Q1 FY27 call on 18 July struck a confident note after what MD and CEO Sashidhar Jagdishan called a very tough four months.

He said the bank is on the verge of pressing the pedal on advances, with deposit growth better than the historical Q1 trend and market share still rising. Business banking grew 22.3%, corporate and wholesale about 18%, and close to ₹14,000 Cr had been disbursed under the new ECLGS 5.0 scheme. Reported profit growth was 5%, or 9.8% adjusted for last year's one-offs, still below balance sheet growth, which management expects to reverse over the longer term.

Margins remain the debate: cost of funds was flat sequentially and about 40 bps lower year on year, borrowings are still about 11% of funding, and the CFO said the 40-50 bps cost-of-funds opportunity will not come in a hurry. The bank is chasing FCNR(B) deposits without giving a number, wants to lift its retail asset mix from 52% toward 60%, and says its ECL transition from April 2027 will not be material. Chairman Rajiv Kumar has joined, while the CEO reappointment and an additional whole-time director remain with the Board.