MUMBAI, April 17 (Reuters Breakingviews) – Global financial markets are volatile but India’s private banking goliath, which is about to get even bigger through a merger with its mortgage lender parent, is staying true to its reputation for consistency. HDFC Bank’s (HDBK.NS) net interest income rose 20% year-on-year in the three months to March. Winning deposits – of late a scramble for most Indian banks – was no problem either. Customer funds grew 21%, more than double the industry’s pace.
The $116 billion financier’s mix of deposits points to some niggles. The 11% growth in low-cost accounts undershot a 30% jump in higher-yielding ones. As interest rates rise, savers tend to move idle funds from low-yielding checking accounts to fixed deposits, where money is locked up for a specific period against juicier interest rates. The cost impact of this dynamic will take some time to play out, Chief Financial Officer Srinivasan Vaidyanathan said in the earnings call on Saturday. For now, the hotly watched net interest margin, unchanged at 4.3% for the last nine months, is holding up.
The bank is firing on most cylinders as it prepares to complete a deal announced a year ago with its $62 billion parent, Housing Development Finance Corporation (HDFC.NS).