Early on Friday, HDFC Bank shares saw a roughly 4% decrease due to a dismal business report for the quarter that ended on June 30. As of 10:17 am, HDFC Bank shares were down 3.97% on the Bombay Stock Exchange (BSE) at Rs 1,658.05.
The bank has had strong performance in previous years, so this decline—which is the result of a decrease in loans and stagnating deposit growth—is a setback. In the first quarter, HDFC Bank saw a 0.8% sequential decline in gross advances.
Deposits at the bank did neither increase or decrease from the previous quarter's level, which was below the bank's performance during the same time last year. The flat rise in deposits was seen by Jefferies analysts as "slightly disappointing," which added to the bearish outlook for the bank's shares.
Although just a small number of deposits were added, the merger of HDFC Bank with its parent non-bank lender last year added a sizable pool of mortgage loans to the bank's portfolio.
HDFC Bank has deposits of Rs 23.79 lakh crore and advances of Rs 24.87 lakh crore at the end of June.
Senior research analyst at CLSA Piran Engineer observed that the emphasis on paying down HDFC's debt caused loan growth to suffer, which resulted in a 1% quarterly drop.
The bank's performance issues were mostly caused by the low-cost current and savings account (CASA) deposits, which decreased by 5% sequentially during the quarter to Rs 8.64 lakh crore.
It should be mentioned that CASA deposits are essential to banks since they offer a cheap source of funding, and a drop in this market might affect the bank's profitability and overall cost-effectiveness.
HDFC Bank was the biggest decline on the Nifty50 index as a result of the market's rapid reaction to the poor quarterly report. The benchmark indices, which had reached record highs on several occasions this week, were also dragged down by the decrease.
