India’s largest private lender records steady lending growth in FY25, and analysts predict brighter days ahead.

A question that has echoed across Dalal Street this month. HDFC Bank, India’s largest private lender, has recorded nearly 10% year-on-year (YoY) loan growth in its Q2 FY25 business update.

The announcement came on October 6, 2025, and immediately pushed the bank’s stock higher in early trade. Analysts now estimate an upside potential of nearly 20%, citing improving margins and stable credit quality.

The optimism follows a year of careful adjustments after the HDFC Ltd. merger in 2023, which temporarily slowed balance sheet expansion. Now, with lending back on track, the focus is shifting to whether this pace can continue through the rest of the financial year.

HDFC Bank Loan Growth 2025 Analysis

Loan growth is the clearest measure of how well a bank can lend and recover money. For HDFC Bank, this number shows stability after two years of transition. The bank’s total advances reached ₹27.9 lakh crore, up 9.9% YoY, while deposits grew 15.1% to ₹27.1 lakh crore.

According to the Economic Survey 2024, released by the Ministry of Finance in July 2024, total scheduled bank credit in India expanded by 20.2% YoY in March 2024. The same report recorded industrial credit growth at 8.5%, up from 5.2% a year earlier.

While HDFC Bank’s loan growth is slightly lower than the system average, it remains strong when adjusted for the merger’s accounting impact.

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Before moving to brokerage opinions, here’s how HDFC Bank’s lending compares with the broader banking sector.

Indicator	Growth/Value	Period
HDFC Bank Advances	9.9% YoY	Q2 FY25
Total Bank Credit Growth	20.2% YoY	March 2024
Industrial Credit Growth	8.5% YoY	March 2024

The data underlines that even though HDFC Bank is lending at a slower rate than the sector average, its lending is more diversified and secure. The merger with HDFC Ltd. has deepened its housing finance reach, improving retail exposure while reducing concentration risk.

Looking ahead, the pace of growth will depend on deposit mobilisation and funding costs, two areas that analysts continue to track closely.

HDFC Bank Share Price Target By Brokerages, Analysts Stay Optimistic

Brokerages have responded positively to HDFC Bank’s business update. Several global and domestic firms expect the stock to gain ground in the next few quarters.

Jefferies, in its latest report dated October 5, 2025, retained HDFC Bank as its “top pick” in the Indian banking space with a target price of ₹1,200. The brokerage cited stable net interest margins and improving retail demand as reasons for optimism.

Nomura, in its October 6, 2025 report, maintained a “Buy” rating with a revised target of ₹1,095, factoring in the recent 1:1 bonus share and merger realignment. Axis Securities issued a similar outlook with a ₹1,150 target, reflecting nearly 19%–20% upside from the current price.

Below is a quick view of how these brokerages interpret the stock’s potential.

Brokerage	Rating	Target Price (₹)	Comment
Jefferies	Buy	1,200	Predicts improved retail loan demand
Nomura	Buy	1,095	Adjusted for merger and bonus issue
Axis Securities	Buy	1,150	Expects steady Q3 margin growth

These targets form the base of the HDFC Bank stock upside potential forecast for FY25. Analysts also believe the second half of the financial year will benefit from easing deposit costs, given that fixed deposit rates have started to plateau.

However, they warn that a slower deposit build-up could limit how fast loan growth can expand. The next quarter’s performance will show if the bank can balance lending with adequate funding support.

HDFC Bank Stock Upside Potential Forecast

Beyond brokerage optimism, the TradingView Market Insight Report (October 2025) pointed out that the bank’s credit-to-deposit ratio climbed to 107%, higher than the previous quarter’s 104%. This shows higher credit disbursal but also indicates pressure to mobilise more deposits.

The report added that margins may stabilise in Q3 FY25, especially if the Reserve Bank of India (RBI) reduces the Cash Reserve Ratio (CRR) in the December policy meeting.

The following table presents key financial ratios from the Q2 FY25 update.

Financial Metric	Current Level	Previous Quarter	Observation
Loan-to-Deposit Ratio	107%	104%	Lending pace outpacing deposit growth
CASA Growth	7.4% YoY	7.10%	Slow but steady improvement
Deposit Growth	15.1% YoY	14.60%	Momentum sustained

The rise in the loan-to-deposit ratio means the bank is lending faster than it is collecting deposits. While this helps short-term profitability, it also increases funding pressure.

To manage this, HDFC Bank is focusing on expanding rural and semi-urban branches, aiming to attract smaller, stable deposits. Analysts say this will be critical for maintaining balance in the next two quarters.

HDFC Bank Quarterly Performance Report

HDFC Bank’s Q1 FY25 results showed deposits growing faster than loans. According to a LoansJagat article, “HDFC Bank Q1: Deposits Grow Faster Than Loans, Signaling Shift in Strategy,” the bank’s deposits rose by about 16.2% year-on-year, while its advances grew by 6.7%.

The rise in loan growth to 9.9% in Q2 suggests that HDFC is gradually returning to stronger lending levels after the merger phase.

In comparison, the Economic Survey 2024 reported that the overall banking system achieved 20.2% credit growth during FY24. HDFC Bank’s steady but moderate growth since then points to recovery rather than aggressive expansion.

Also Read - HDFC Bank Q2 Highlights: Deposits Jump 12%, Gross Advances Up Nearly 10%

Here’s how the bank’s numbers have evolved over the last three quarters.

Quarter	Loan Growth	Deposit Growth
Q4 FY24	8%	14%
Q1 FY25	8.60%	14.00%
Q2 FY25	9.90%	15.10%

The improvement reflects the bank’s effort to normalise after merger integration. The increase in deposits also shows customers’ renewed confidence.

Earlier in 2024, the publication Indian Banking Pulse reported on public sector banks achieving similar growth after RBI’s liquidity push. That report can be read here: Indian Banking Pulse: Public Lenders Record Strong FY24 Finish.

This linkage helps understand how HDFC Bank’s performance fits into the larger banking trend shaped by policy support and post-merger reforms.

Conclusion

HDFC Bank’s second-quarter update of FY2025 shows a picture of calm rebuilding rather than aggressive expansion. The 9.9% YoY loan growth, 15.1% deposit increase, and improving asset quality underline balance and prudence.

Brokerages project nearly 20% upside as the bank regains momentum, supported by rising demand and stabilising margins. The coming months will decide if India’s largest private lender can turn steady recovery into full-fledged growth.

For now, the HDFC Bank loan growth 2025 analysis, supported by strong fundamentals and cautious optimism, keeps the market’s faith firmly intact.

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