In the shadow of an abrupt leadership departure, HDFC Bank has offered its shareholders something more durable than reassurance: numbers. The bank's loan portfolio grew 10.2 percent year-over-year in March 2026, marking a second consecutive quarter of double-digit growth and signaling that the long, deliberate convalescence following its landmark 2023 merger may finally be giving way to renewed momentum. Yet the stock sits at a five-year valuation low, and the market — ever alert to what is left unsaid — is weighing operational recovery against governance uncertainty, asking whether this quart
HDFC Bank's 10.2% loan surge signals post-merger recovery as valuations hit 5-year low
The bank is finally emerging from the post-merger slowdown
Mark
So the stock hit a 52-week low right after the chairman resigned. Is that the story here—governance trouble—or is it something else?
Mimi
The resignation spooked the market, no question. But what's interesting is that the bank's actual lending numbers are improving. Double-digit loan growth for two quarters in a row. That's the operational signal investors were waiting for.
Luke
But we should be clear: the bank hasn't said which sectors are driving that growth. We know the number—10.2 percent—but not the composition. That matters for assessing risk.
Mark
Why does the credit-to-deposit ratio matter so much? I see it mentioned everywhere.
Mimi
After the merger, it spiked to 104.4 percent, which means the bank was lending more than it had in deposits. That's unsustainable. The RBI doesn't prescribe a number, but banks typically aim for 75 to 80 percent. HDFC was being forced to be cautious.
Luke
And now it's at 98.5 percent. Still above the comfort zone, but moving the right direction. The question is whether the bank can keep growing loans while bringing that ratio down further.
Mark
The stock is at its lowest valuation in five years. Is that a buy signal?
Mimi
It's trading at 2.1 times book value, which is genuinely cheap by HDFC's own history. But the resignation creates uncertainty about governance and leadership. You're buying a cheap stock with a question mark attached.
Luke
And we don't know yet if the loan growth acceleration is sustainable or just a seasonal bounce. March is always a peak lending quarter. We need to see what happens in the next few quarters.
Mark
So what should an investor actually do?
Mimi
Watch the next few quarterly results. If loan growth stays in double digits and the credit-to-deposit ratio keeps improving, that's a genuine turnaround. If it falls back to single digits, the market was right to be cautious.
Luke
And pay attention to who replaces Chakraborty and what they say about the bank's lending strategy. That will tell you whether the board is committed to this acceleration or whether it was just a one-quarter phenomenon.
Der Puls
- Chairman Atanu Chakraborty's unannounced resignation on March 18 rattled investor confidence and drove the stock to a 52-week low of Rs 726.75, raising immediate questions about stability at the top.
- The sell-off has pushed HDFC Bank's price-to-book valuation to 2.1x — its lowest in five years — placing it well below peer Kotak Mahindra Bank's 2.8x and prompting debate about whether the stock has reached a genuine floor.
- Loan growth of 10.2% year-over-year to Rs 30.57 lakh crore offers the clearest evidence yet that the bank is emerging from the cautious, post-merger lending slowdown that frustrated shareholders through much of 2024 and 2025.
- Deposit growth of 14.4% has given the bank more room to lend responsibly, pulling the credit-to-deposit ratio down from a post-merger peak of 104.4% to 98.5% — still elevated, but moving toward safer ground.
- With sector-level loan composition undisclosed and the chairman's seat unsettled, investors remain watchful: the operational machinery appears sound, but the question of whether this recovery is durable or merely seasonal has not yet been answered.
In the shadow of an abrupt leadership departure, HDFC Bank has offered its shareholders something more durable than reassurance: numbers. The bank's loan portfolio grew 10.2 percent year-over-year in March 2026, marking a second consecutive quarter of double-digit growth and signaling that the long, deliberate convalescence following its landmark 2023 merger may finally be giving way to renewed momentum. Yet the stock sits at a five-year valuation low, and the market — ever alert to what is left unsaid — is weighing operational recovery against governance uncertainty, asking whether this quarter is a turning point or merely a seasonal tide.
On April 2, HDFC Bank's stock touched Rs 726.75 — its lowest in a year — after part-time chairman Atanu Chakraborty resigned without warning on March 18. The market's unease was understandable: a sudden departure at the top of one of India's largest banks invites speculation about governance and direction. But over the weekend, the bank released quarterly figures that offered a different kind of signal.
Advances grew 10.2 percent year-over-year to Rs 30.57 lakh crore in the March 2026 quarter, the second consecutive quarter of double-digit loan growth. The significance lies in what came before. When HDFC Bank merged with HDFC in July 2023, the combined entity inherited a credit-to-deposit ratio of 104.4 percent — far above the 75–80 percent range considered prudent. The RBI had made its discomfort with reckless lending clear, and the bank responded by pulling back. In March 2025, loan growth had slowed to just 5.4 percent. Shareholders waited.
The March 2026 numbers suggest the patience is beginning to pay off. Deposits grew 14.4 percent to Rs 31.05 lakh crore, with fixed deposits climbing 15.5 percent, giving the bank a stronger base from which to lend. The credit-to-deposit ratio has eased to 98.5 percent — still above ideal, but meaningfully improved. The bank's return on average assets for the full financial year reached approximately 1.92 percent, matching Kotak Mahindra Bank and comfortably ahead of Axis Bank.
The valuation picture is striking. At 2.1 times book value, HDFC Bank sits at the lowest point in its five-year range and well below Kotak Mahindra Bank's 2.8 times — a gap that some investors will read as opportunity and others as a warning. What the bank has not disclosed is which sectors drove the quarter's growth, leaving the composition of the recovery somewhat opaque. The chairman's seat remains unsettled. Whether this quarter represents the start of a genuine and sustained turnaround, or a strong seasonal performance that flatters a still-fragile recovery, is the question the market will spend the coming months trying to answer.
HDFC Bank's stock tumbled to its lowest point in a year on April 2, hitting Rs 726.75 per share, a sharp fall that began when the bank's part-time chairman and independent director, Atanu Chakraborty, resigned without notice on March 18. The market's anxiety about what the resignation might signal—instability, governance concerns, a loss of confidence—sent investors searching for reassurance in the bank's actual numbers. On Saturday, the bank delivered what many were waiting for: evidence that its core lending business was finally accelerating again.
The bank's loan portfolio grew 10.2 percent year-over-year in the quarter ending March 2026, reaching Rs 30.57 lakh crore. This marks the second consecutive quarter of double-digit loan growth, a milestone that matters because it suggests HDFC Bank is emerging from a prolonged period of caution that began immediately after its merger with HDFC in July 2023. The previous quarter, ending December 2025, had shown 12 percent growth. For context, March is typically a peak lending season—companies and individuals borrow heavily before the financial year closes—so strong numbers in this quarter carry particular weight.
The caution that followed the merger was deliberate, if painful for shareholders. When HDFC Bank and HDFC combined, the merged entity inherited a credit-to-deposit ratio of 104.4 percent by March 2024, a level well above the 75 to 80 percent range that banks typically maintain. The RBI's then-governor, Shaktikanta Das, had made clear in January 2024 that the central bank does not mandate a specific ratio but wants to prevent reckless lending and ensure that credit extended bears some relationship to deposits available. HDFC Bank responded by growing its loan book cautiously. In the March 2025 quarter, advances grew only 5.4 percent year-over-year to Rs 26.2 lakh crore. The market watched and waited, disappointed.
The numbers from March 2026 suggest the bank has found its footing. Deposits grew 14.4 percent to Rs 31.05 lakh crore, with fixed deposits climbing 15.5 percent to Rs 20.45 lakh crore. This deposit growth has given the bank more room to lend. The credit-to-deposit ratio has improved to 98.5 percent, still elevated but moving in the right direction—down from the post-merger peak of 104.4 percent and closer to the prudent range. For comparison, State Bank of India, the country's largest bank, maintained a ratio of 76.6 percent at the end of March 2024.
The bank's operational efficiency remains a strength. HDFC Bank's return on average assets, when annualized for the full financial year 2026, reached approximately 1.92 percent—matching Kotak Mahindra Bank and outpacing Axis Bank's 1.49 percent. This metric, closely watched by investors, shows the bank is generating strong returns from its asset base despite the lending constraints of the past two years.
The stock's recent weakness has created a valuation opportunity. HDFC Bank trades at 2.1 times its standalone book value, the lowest point in five years. Over the past five years, the stock has traded between 2.1 and 4.8 times book value. By comparison, Kotak Mahindra Bank trades at 2.8 times book value and has historically ranged between 3.1 and 7.1 times. HDFC Bank is now at the lower end of its own historical range and well below its peer.
What remains uncertain is whether the acceleration in loan growth will persist. The bank has not disclosed which sectors drove the March quarter's 10.2 percent growth, leaving investors to infer the composition of the loan book from limited information. The question now is whether the turnaround is durable—whether the bank has genuinely recalibrated its lending strategy and can sustain double-digit growth without again pushing the credit-to-deposit ratio into uncomfortable territory. The resignation of the chairman adds another layer of uncertainty, though the core business metrics suggest the operational machinery is functioning. Investors are watching closely to see if this quarter marks the beginning of a genuine recovery or merely a seasonal bounce.
Bemerkenswerte Zitate
The RBI does not prescribe any credit-deposit ratio for banks to maintain, but wants to ensure there is no unnecessary exuberance in lending and that credit extended bears correlation to deposits available.— Shaktikanta Das, then-RBI governor, January 2024
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