Loan Growth Picks Up After Merger: HDFC Bank CEO Aims to Beat Rivals

Is India’s top private bank set to pull ahead again? After a slow year, HDFC Bank is showing signs of faster loan growth.

According to a July 2025 report published by Business Standard, the bank’s Chief Executive Officer Sashidhar Jagdishan confirmed that loan growth is gradually improving. The bank recorded an 8% increase in advances in the first quarter of FY26, a clear recovery after the post-merger slowdown seen last year.

This comes after HDFC Bank merged with HDFC Ltd, which changed its loan-to-deposit ratio and led to more careful lending during FY25. Now, the bank’s leadership says they expect to match the industry’s credit growth in FY26 and go beyond it in FY27.

Post-Merger Focus Shifts to Liquidity Balance

After the merger, HDFC Bank’s loan-to-deposit ratio jumped to about 110%, leading to tighter lending controls. To fix this, the bank worked hard to grow its deposits during FY25.

That year, deposit growth was 2.5 times faster than loan growth. This helped bring the loan-to-deposit ratio down to a safer level of around 96% by March 2025. In April 2025, the CFO said the bank now plans to reduce it further to 85–90% by FY27.

Here’s a quick look at the FY25 numbers:

Financial Metric	FY25 Performance
Loan Growth	5.4% to 5.9%
Deposit Growth	14.10%
Loan-to-Deposit Ratio	96% (down from 110%)
Net Profit	₹67,347 crore (+10.7% YoY)

This careful shift shows a plan to create a stronger balance sheet and prepare for future growth. The next part explains how the bank plans to use this base to regain its top spot in lending.

HDFC Loan Strategy to Catch Up With Industry Growth

In July 2025, HDFC Bank CEO Sashidhar Jagdishan told stakeholders that the bank aims to grow credit in line with the banking industry during FY26. The goal is to move past the cautious lending seen post-merger and regain full momentum.

This plan is backed by strong credit demand in retail, small business, and infrastructure lending. The bank also plans to use its rising deposit base to manage liquidity more smoothly.

Supporting this, the bank’s CFO noted that with deposits growing faster than loans, the liquidity position has improved. This will help the bank expand its credit base without relying heavily on wholesale borrowing.

Technology, MSMEs and Cross-Sell Bring Fresh Lending Channels

While much of the focus has been on lending numbers, recent updates show the bank is making strong moves in digital and cross-selling areas, especially since the merger.

A Q1 FY26 review highlights that HDFC Bank has launched over 15 generative AI tools internally. These are helping with customer service predictions, document automation, and better credit assessment.

The bank is also active on the RBI-SIDBI-backed GST Sahay platform, helping small businesses get invoice-based loans via the GST system.

In the home loan segment, customer engagement is strong. Over 95% of new home loan customers opened savings or current accounts. More than half of them also bought other products.

Customer Engagement Highlights

Customer Engagement Metric	FY25 Data
CASA Open Rate (Home Loan)	Over 95%
Cross-sell Ratio	More than 50% took extra product
GenAI Programs Rolled Out	15+

These steps are expected to grow lending, improve repayment quality, and strengthen long-term customer ties.

Deposit Focus Continues with Steady Branch Expansion

As part of its effort to balance loans and deposits, HDFC Bank has been growing its branch network steadily. Even though the bank runs only about 5% of all bank branches in India, it managed to collect 14.6% of all new deposits added to the banking system in FY25.

This shows that the bank’s branch network is working well and helping it bring in more customers. HDFC Bank says it will continue to open more branches, especially in smaller towns and rural areas, to grow its customer base and improve deposit collection.

In FY25 alone, the bank opened over 700 new branches, with more than half of them set up in semi-urban and rural regions. This has taken the total number of branches to around 9,455.

Although there is no official confirmation on targets for FY26 and FY27, the bank has said it expects branch expansion to continue at a steady pace.

Deposit Mobilisation Highlights

Deposit Mobilisation	FY25 Highlights
Market Share (Total)	11% with 5% of total branches
New Deposit Share	14.6% of total incremental deposits

As the bank moves deeper into Tier‑2 and Tier‑3 cities, these new deposits are expected to support more lending to households and small businesses.

From a short-term point of view, the bank now has a stronger balance sheet that can support stable, steady growth.

Conclusion

The 8% loan growth recorded in the April–June 2025 quarter shows that the slowdown seen earlier is starting to fade. With better liquidity, fewer restrictions on lending, and new tech and MSME-focused strategies, HDFC Bank is getting ready to grow faster again.

The coming quarters will be important as the bank tries to carry out its plans, especially with global interest rates and inflation still uncertain. But with a strong deposit base and a growing branch network, HDFC Bank is preparing to move ahead of the industry average, possibly as early as FY27.

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