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CASA mix stable at 44% on a sequential basis HDFCB released its 4QFY23 business update.

Following are the key takeaways:

* Loan book grew 16.9% YoY (6.2% QoQ) to INR16t. Gross of transfers through IBPCs and bills rediscounted, the loan book grew 21.3% YoY (6.5% QoQ). As per the bank’s internal classification, domestic retail loans grew 21% YoY (5% QoQ); Commercial & rural banking grew 30% YoY (9.5% QoQ). Corporate book grew 12.5% YoY (4.5% QoQ).

* Deposits grew 20.8% YoY (8.7% QoQ) to INR18.83t. Retail deposits grew 23.5% YoY (7.5% QoQ), while wholesale deposits grew 10% YoY (15.5% QoQ). In 4QFY23, the bank accreted deposits amounting to ~INR1.5t.

* CASA deposits grew 11.3% YoY (9.6% QoQ). Retail CASA grew at 12.5% YoY. Thus, CASA ratio was flat QoQ at ~44.0%. ? The bank purchased loans aggregating INR93.4b in 4QFY23, through the direct assignment route, under a Home loan arrangement with HDFC.

Valuation and view: HDFCB reported robust business growth with both advances and deposits growing at a rapid pace. Retail and Commercial loans continues to drive overall loan growth while corporate loans too saw a healthy trend. Deposit growth surged sharply after witnessing a softer 3QFY23 with the bank garnering INR1.5t of deposits during the quarter, significantly more than what the bank raised in the last two quarters together. CASA ratio also held admirably flat at ~44%. While we expect margins to remain stable, continued momentum in Retail and Commercial Banking will be supportive of fee income.

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