India Ratings and Research (Ind-Ra) has affirmed HDFC Bank’s Long-Term Issuer Rating at ‘IND AAA’ with a Stable Outlook. A new rating of ‘IND A1+’ was assigned to INR 250 billion in Certificates of Deposit (CDs), while existing instruments were affirmed. The ratings reflect the bank’s financial strength, systemic importance, and strong through-the-cycle performance despite recent merger-related factors impacting its Loan-to-Deposit Ratio.
Issuer Rating and Instrument Actions Confirmed
Pursuant to regulatory requirements, HDFC Bank today announced the latest rating actions taken by India Ratings and Research (Ind-Ra) effective March 17, 2026. The agency affirmed the Long-Term Issuer Rating at ‘IND AAA’ with a Stable Outlook.
Key rating actions related to specific instruments are summarized below:
- Issuer Rating: Affirmed at IND AAA/Stable.
- Certificates of deposit (7-365 days, INR 250 billion): Assigned rating of IND A1+.
- Certificates of deposit (7-365 days, INR 1250 billion): Affirmed rating of IND A1+.
- Fixed deposits: Affirmed at IND AAA/Stable.
- Infrastructure bonds (INR 200 billion): Affirmed at IND AAA/Stable.
- Basel-III compliant Tier 2 bonds (INR 250 billion): Affirmed at IND AAA/Stable.
- Basel-III compliant Tier 1 bonds (INR 150 billion): Affirmed at IND AA+/Stable.
Detailed Rationale and Key Drivers
The ratings are underpinned by HDFC’s financial strength, diverse earning profile, and its sustained strong through-the-cycle performance in the Indian banking system. HDFC remains the second-largest bank nationally and the largest private sector bank. Its systemic importance is recognized by the RBI classifying it as a Domestic Systemically-Important Bank.
Strengths Summary
- Largest bank with high systemic importance.
- Stable through-the-cycle performance evidenced by strong operating buffers (pre-provisioning operating profit/provisions of 8.6x in FY25).
- Loan growth kept pace with the industry, led by corporate and Commercial and Rural Banking (CRB) portfolio expansion (CRB grew 16.8% yoy in 3QFY26).
- Strong capital buffers with a standalone CET1 ratio of 17.4% in 3QFY26.
- Robust focus on deposit growth, aiming to bring the Credit-Deposit (CD) ratio back to the pre-merger range of 85%-90%.
- High provision coverage ratio of 65.9% in 3QFY26 provides comfort against potential asset quality stress.
Key Weakness
The primary constraint noted is the focus on bringing equilibrium to the Loan-to-Deposit (LDR) ratio, which is constraining near-term loan growth.
Liquidity and Capital Position
Liquidity is termed Superior. HDFC maintained a liquidity coverage ratio of 116% at 3QFY26, significantly above the 100% regulatory requirement. Capital remains robust, with the bank maintaining ample cushions for the next two-to-three years, supported by resilient internal accruals and robust market access for capital raising.
Financial Snapshot (Standalone)
Key standalone indicators for FY25 compared to FY24 highlight growth:
| Particulars | FY25 (INR billion) | FY24 (INR billion) |
|---|---|---|
| Total assets | 39,102.0 | 36,176.2 |
| Total equity | 5,014.3 | 4,402.5 |
| Net income | 673.5 | 608.1 |
| CET1 (%) | 17.2 | 16.3 |
Source: BSE
