HDFC Bank's Mega Merger: Creating a financial powerhouse worth $273.77 billion

HDFC Bank, one of India's leading financial institutions, announced on Wednesday that its merged loan book with Housing Development Finance Corporation (HDFC) reached approximately 22.45 trillion rupees ($273.77 billion) at the end of the June quarter, Reuters reported. This milestone follows the completion of the much-anticipated $40 billion merger between HDFC Bank and HDFC on July 1, making it the largest merger in India's corporate history and propelling the bank into the esteemed list of the world's top 10 banks based on market capitalisation.

According to HDFC Bank, its loan book experienced a significant 13.1 per cent growth in the June quarter compared to the previous year, although some figures may not be directly comparable. Furthermore, the merged entity reported that its deposits surged to around 20.64 trillion rupees by the end of June, marking a notable 16.2 per cent increase from the previous year.

HDFC Bank also revealed that the combined entity's liquidity coverage ratio, a crucial measure of the bank's cash-like assets, stood at approximately 120 per cent on a proforma basis for the quarter ending June 30.

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Breaking down the figures, HDFC Bank's standalone gross advances soared to about 16.16 trillion rupees as of June end, representing a substantial 15.8 per cent growth, while deposits witnessed a notable 19.2 per cent surge to 19.13 trillion rupees. As for the combined advances of HDFC Bank Ltd. and Housing Development Finance Corp., they experienced a 13 per cent year-on-year increase, reaching 22.45 lakh crore rupees by June 30. Meanwhile, HDFC Bank's standalone advances recorded a 15.8 per cent growth, amounting to 16.55 lakh crore rupees.

The merger between HDFC Bank and HDFC was announced in April 2022 and officially took effect on July 1, although the record date for delisting HDFC shares from the exchanges is set for July 13. After this date, HDFC shareholders will receive HDFC Bank shares based on the agreed-upon swap ratio of 42 shares of HDFC Bank for every 25 shares held.

HDFC Bank reported impressive growth in its retail book, which rose by 20 per cent compared to the previous year, while commercial and rural banking loans experienced a similar growth rate of 20 per cent. Corporate and other wholesale loans showed an 11 per cent year-on-year increase.

It's important to note that due to the timing of HDFC's financial book closure a few days before June 30, some of the merged entity's numbers are not directly comparable to the same period last year, as stated by the bank.

(With Inputs from Reuters)