HDFC Bank moderates FY27 growth outlook, targets 12% Y-o-Y

HDFC Bank, India's largest private-sector lender, has recalibrated its FY27 growth projections, opting for a more cautious 12 per cent year-on-year expansion due to prevailing geopolitical uncertainties, moving away from its previous ambition to outpace the broader banking system's credit growth.

HDFC Bank, India’s largest private-sector lender, has taken a more measured view on its FY27 growth trajectory in the light of geopolitical uncertainties, stepping back from its earlier guidance of the lender outpacing credit growth in the banking system.

It now aims to maintain the growth momentum seen in FY26 — 12 per cent year-on-year (Y-o-Y) as against 5.4 per cent in FY25.

While loan growth in FY26 showed a marked improvement from FY25, it still fell short of the bank’s stated guidance.

The bank had earlier guided that in FY26, its loan growth would be in line with the system’s credit growth.

This was after calibrating its loan expansion in FY25 to bring down its elevated credit-deposit (CD) ratio following the merger with HDFC.

Strategic Growth and Geopolitical Considerations

While the reported numbers say credit by banks in FY26 came within a touch of 16 per cent, experts are of the view that the figure looks inflated due to the change in the reporting period made by the Reserve Bank of India.

“If you see through a large part of FY26, nominal growth in gross domestic product was expected at 9-9.5 per cent.

"So, the consensus was that the banking system’s credit growth would be 10.5-1.5 per cent.

"This is what we had expected and we calibrated our strategies and our growth in line with that.

"And that is why we grew at 12 per cent,” said Sashidhar Jagdishan, managing director and chief executive officer, in a call with analysts, following the bank’s Q4FY26 earnings.

He said the bank was well positioned to continue this kind of momentum in a manner that “we do responsible growth and we don’t want to overstretch beyond what could potentially have some landmines in the future”. Kaizad Bharucha, deputy managing director, HDFC Bank, said:

“We will continue to maintain strong momentum and a positive growth trajectory.

"However, we need to remain mindful of the evolving geopolitical situation and its potential fallout.”

“We are confident underlying positivity will continue. We have not seen any alarm bells so far and will remain focused on the areas outlined earlier,” he added.

Driving Factors and Future Outlook

On the growth drivers, Bharucha said: “On the corporate side, we have delivered (growth) over the previous year.

"We expect this to sustain, supported by underlying demand.

"However, we may moderate this in view of geopolitical developments, which we expect to play out over the next couple of months in FY27.”

He said the bank was seeing opportunities across sectors, including electronics, food processing, automobiles and auto ancillaries, renewable energy, and semiconductors.

Also, there are emerging prospects in acquisition financing in addition to existing avenues such as project finance and supply-chain financing.

“We expect companies, including emerging companies, to remain resilient in the year ahead,” Bharucha said.

On retail, Bharucha said the bank’s growth had improved over last year, with a stronger pickup over the past three quarters.

This growth has been broadbased across “our vehicle financing business as well as personal and business loans”.

In addition, demand in the mortgage segment has remained steady and performance has been healthy.

Regulatory Focus and Leadership

The bank’s management says the credit-deposit (CD) ratio was not a metric the bank is focusing on because the Reserve Bank of India (RBI) had indicated that the liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) were the key metrics from a banking perspective.

“Our focus is on profitability by pursuing growth opportunities.

"The loan-deposit ratio is not a constraint,” Jagdishan said.

Separately, Jagdishan was in favour of Keki Mistry, interim part-time chairman of the bank, taking his (Mistry’s) role beyond the three months for which he has been appointed.

“Kaizad and I are rooting for Keki Mistry to be part-time chairman of HDFC Bank.

"The board will take its decision, taking into account all matters of fact that are available from a regulatory perspective.

"Based on that, they will recommend the right name to the RBI,” Jagdishan said.

Mistry took over the interim role last month after Atanu Chakraborty resigned abruptly as part-time chairman.