Banking Stocks Rally
Bank Nifty Gains 1.4% as Strong Lender Updates Lift Indian Banking Shares
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AU Small Finance Bank’s assets under management grew 25% year over year, accelerating from 23% in the previous quarter, with growth in vehicle loans cited as a driver. Deposits and CASA both rose 29% year over year; Jefferies said the bank remained a top pick, citing growth, profitability and its transition to a universal bank.
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HDFC Bank reported September-quarter loan growth of 16%, deposit growth of 19% and CASA growth of 11%. Its loan-to-deposit ratio stood at 97%; Jefferies noted that the reported growth was boosted in part by $11.5 billion in FCNR-B deposits.
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Punjab National Bank reported that domestic and global advances grew 14.80% and 12.59% year over year, respectively, while domestic and global deposits rose 9.44% and 9.90%.
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Indian Bank’s RAM advances—covering retail, agriculture and MSME lending—reached ₹4.43 trillion, up 17.8% year over year. Its CASA ratio was 39.3%, down from 39.7% in the prior quarter, and ICICI Securities flagged deposit mobilization as a key monitorable because deposit growth trailed advances.
Indian banking stocks surged on October 5, with the Nifty Bank index climbing more than 1.4% as investors cheered strong loan and deposit growth from major lenders Rediff. State-owned banks led the charge, with the Nifty PSU Bank index jumping about 2%. Bank of India, Punjab National Bank, Indian Overseas Bank, Indian Bank, and Bank of Baroda were among the day's biggest gainers as quarterly results showed expanding credit portfolios and deposit bases across the sector.
HDFC Bank also advanced after posting 16% loan growth and 19% deposit growth in the September quarter, while naming Anup Bagchi as its next managing director and CEO Upstox. Not all stocks moved higher, however—some investors cashed in profits as mixed signals emerged about deposit quality and growth sustainability at certain lenders.
AU Small Finance Bank Accelerates Loan Growth
AU Small Finance Bank posted assets under management growth of 25% year over year, accelerating from 23% in the prior quarter Upstox. Vehicle loans drove much of the expansion. The bank's deposits and CASA—current and savings accounts—both climbed 29% year over year, outpacing loan growth and signaling strong customer confidence Upstox.
Jefferies rated the bank a top pick, citing its rapid growth, rising profitability, and shift toward becoming a universal bank Upstox. The strong metrics suggest AU Small Finance is capturing market share in both retail lending and deposit-gathering as it scales its operations.
HDFC Bank's Growth Boosted by Foreign Deposits
HDFC Bank reported September-quarter loan growth of 16% and deposit growth of 19%, with CASA—the stickier, lower-cost deposits—rising 11% Upstox. The lender's loan-to-deposit ratio stood at a healthy 97%, meaning it deployed nearly all deposits into lending Upstox.
Jefferies noted that reported growth was partly boosted by $11.5 billion in FCNR-B deposits—rupee accounts held by non-resident Indians Upstox. While these deposits added to the headline growth rate, they can be volatile if NRIs withdraw funds during market stress or currency swings.
PSU Banks Show Solid but Uneven Lending Momentum
Punjab National Bank reported domestic and global advances grew 14.80% and 12.59% year over year Upstox. Deposits rose 9.44% domestically and 9.90% globally, meaning loan growth outpaced deposit growth—a sign PNB is stretching its balance sheet to meet credit demand Upstox.
Indian Bank's retail, agriculture, and MSME advances reached ₹4.43 trillion, up 17.8% year over year Rediff. However, its CASA ratio slipped to 39.3% from 39.7%, and ICICI Securities flagged deposit mobilization as a key concern because deposit growth was trailing advances Rediff. Both banks face pressure to attract cheaper customer deposits to fund faster credit expansion.
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