HDFC Bank shares witnessed a sharp 3.5% rally today, trading near their all-time high, after the bank announced a strategic cut in its savings deposit interest rate. The bank reduced the savings rate by 25 basis points, bringing it down to 2.75% for deposits below ₹50 lakh — a move that marks its first rate reduction on savings accounts in five years. This step reflects the bank’s calculated effort to optimize its funding cost and strengthen its profitability going forward.
The rate cut has caught the attention of global brokerage firm Macquarie, which continues to maintain an ‘Outperform’ rating on HDFC Bank while setting a revised price target of ₹2,300. According to Macquarie, the reduction in the savings deposit rate is expected to add around 5 basis points to the bank’s net interest margins (NIM) starting from the first quarter of FY26. This potential margin boost is one of the key reasons behind the brokerage’s optimistic outlook.
Macquarie also highlighted that HDFC Bank’s margins are likely to improve gradually as the bank actively replaces its high-cost borrowings — particularly those inherited from HDFC Ltd — with lower-cost borrowings and deposits. This strategy is aimed at reducing the overall cost of funds, thereby enhancing profitability over the coming quarters.
Another strong point emphasized by Macquarie is the improvement in the bank’s loan-to-deposit ratio, which now stands below 100%. Since December 2023, this ratio has declined by more than 1000 basis points, reflecting the bank’s improved liquidity management and deposit mobilization efforts. A lower loan-to-deposit ratio not only signals a healthier funding profile but also reduces the reliance on expensive borrowings, giving the bank more breathing room to lend aggressively without raising additional capital costs.
The market has welcomed these developments, and investors seem to be reassured by the combination of operational improvements, strategic interest rate moves, and strong endorsement from analysts like Macquarie. As HDFC Bank continues to fine-tune its balance sheet and focus on cost-efficient growth, it remains a compelling pick for both long-term investors and market watchers.
Disclaimer:
This article is for informational and educational purposes only and should not be treated as investment advice. Investing in the stock market carries risks, and past performance is not indicative of future returns. Readers are advised to conduct their own research or consult with a certified financial advisor before making any investment decisions
