HDFC Bank Loan Growth Rebounds to 11.9%, Sparking Stock Recovery Hopes

BANKINGFINANCE

Overview

HDFC Bank posted 11.9% year-on-year loan growth for its December 2025 quarter, signaling a strong rebound from subdued post-merger performance. Deposits grew 11.5%, with the credit-to-deposit ratio nearing 99.5%. Attractive valuations and improving metrics suggest potential stock appreciation, though regaining its 'darling' status requires sustained growth.

HDFC Bank's loan book is expanding again. Gross advances grew 11.9% year-on-year to ₹28.44 lakh crore in the December 2025 quarter. This marks a significant acceleration after a period of subdued growth following its merger with HDFC.

Deposits also saw healthy expansion, rising 11.5% to ₹28.59 lakh crore, largely driven by fixed deposits. The bank's credit-to-deposit ratio now stands near 99.5%, indicating a managed balance between lending and funding.

Post-Merger Recovery

The merger with HDFC had led to a cautious approach to loan growth, with a credit-to-deposit ratio exceeding 105% in December 2023. In the December 2024 quarter, loan growth was a mere 2.9%, with a ratio of 98.2%. The latest figures suggest the bank is successfully navigating these integration challenges.

Valuation Snapshot

HDFC Bank's stock has outperformed the Sensex during calendar year 2025. Trading near its 10-year valuation lows, with a price-to-book value of 2.9 times and a price-to-earnings ratio of 21.2 times, the stock presents an attractive proposition for investors. Analysts suggest this positioning, coupled with the improving operational metrics, could signal a turnaround.

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