With market cap of $152 billion, HDFC Bank becomes world's seventh most valued lender

The largest private sector bank in India just got a whole lot bigger. HDFC Bank shares rose over 2 per cent on Monday to close at Rs 1,679.20 on the BSE, with the listing of new shares of HDFC Bank issued to shareholders of parent HDFC Ltd, following a $40 billion reverse merger. Strong quarterly earnings by the private sector lender also buoyed investors' sentiments.

With a market capitalisation of over Rs 12.65 lakh crore or around $152 billion as of closing on Monday, HDFC Bank now joins the list of top ten global banks with a market cap of over $100 billion.

HDFC Bank was promoted by housing finance giant HDFC back in 1994. That was the time when the doors were just opening for private players in India's banking sector. Almost 30 years later, the son has grown older and has now acquired the father's business, effective July 1.

On Monday, July 17, HDFC Bank's shares started trading as a merged entity. In terms of market cap, it is now the world's seventh-largest lender. It is now bigger than global giants like Morgan Stanley, Royal Bank of Canada and Goldman Sachs on market cap, but still behind the likes of JP Morgan, Bank of America, Industrial and Commercial Bank of China and HSBC.

HDFC Bank reported a consolidated net profit of Rs 12,370 crore for the April-June quarter, up 29.1 per cent year-on-year. Its consolidated net revenue rose 25.9 per cent from a year ago to Rs 35,067 crore.

On a standalone basis, HDFC Bank reported a net profit of Rs 11,952 crore, up 30 per cent year-on-year. Its net interest income rose 21.1 per cent to Rs 23,599 crore.
As of June 30, 2023, it had a total balance sheet size of over Rs 25.01 lakh crore. HDFC Bank's total deposits were up 19.2 per cent year-on-year to Rs 19.13 lakh crore, while total advances grew 15.8 per cent to over Rs 16.15 lakh crore.

The bank had 7,860 branches and 20,352 ATMs/cash deposit and withdrawal machines across 3,825 towns and cities as of June 30, 2023.

In the April-June quarter, its gross non-performing assets (NPA) were at 1.17 per cent, slightly higher than the 1.12 per cent gross NPAs reported in the January-March quarter, but still lower than the 1.28 per cent in the April-June quarter of 2022.

JP Morgan analysts Saurabh Kumar and Pranuj Shah have said the merger with HDFC is positive from a medium-term perspective given the opportunity on liability refinancing, cross-selling of products and lower share of unsecured loans.

"Only 30 per cent of HDFC's customers come from the bank and the bank's own penetration of mortgages in its customer base is just 2 per cent. HDFC's credit underwriting with the bank distribution opens up a large opportunity, just as the residential cycle is picking up. Further, direct ownership of fee subs (insurance and asset management company) should enable better cross-selling and fee income," the analysts said.

Sashidhar Jagdishan, the MD and CEO of HDFC Bank, had said in a letter to employees on July 1 that the pace at which they aimed to grow, they could be creating "a new HDFC Bank every four years."