HDFC Bank to Raise ₹60,000 Crore Through Debt Instruments

HDFC Bank plans to raise ₹60,000 crore through debt instruments to bolster its financial position and support future growth, reflecting its strategy as a leading private sector bank in India.

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HDFC Bank to Raise ₹60,000 Crore Through Debt Instruments

HDFC Bank to Raise ₹60,000 Crore Through Debt Instruments

HDFC Bank, one of India's leading private sector banks, has announced plans to raise up to ₹60,000 crore through the issuance of various debt instruments over the next 12 months. The bank's board of directors approved the annual renewal of long-term bonds and perpetual debt instruments during their meeting on April 20, 2024, where they also declared the results for the quarter ended in March 2024.

The decision to raise funds comes amid lagging deposit growth and credit growth at HDFC Bank. The bank intends to raise resources through a combination of long-term bonds, perpetual debt instruments, and Tier II capital bonds. This signifies an increase from the ₹50,000 crore approved for issuance in the previous year. The annual renewal of the bond issuance is subject to shareholder and regulatory approvals.

During the board meeting, HDFC Bank reported a net profit of ₹16,511 crore for the quarter ended in March 2024, a modest 0.84 percent gain from the previous quarter. This was in line with market estimates of ₹16,576 crore. The bank's net interest income (NII) increased to ₹29,007 crore from ₹28,470 crore in the previous quarter.

HDFC Bank's net revenue grew to ₹47,240 crore, which included transaction gains of ₹7,340 crore from the stake sale in its subsidiary, HDFC Credila Financial Services. In addition to the debt instrument issuance, the bank also announced a special dividend of ₹19.5 per equity share of ₹1.

Why this matters: HDFC Bank's decision to raise a significant amount of funds through debt instruments reflects the bank's strategy to bolster its financial position and support future growth. As one of India's largest private sector banks, HDFC Bank's fundraising plans could have implications for the broader banking sector and the country's financial markets.

The bank's fundraising plans and financial results were announced by HDFC Bank's board of directors following their meeting on April 20, 2024. The bank's management expressed confidence in their ability to navigate the current economic environment and maintain a strong financial position. "The annual renewal of our bond issuance program will provide us with the necessary resources to support our growth plans and meet the evolving needs of our customers," said a senior HDFC Bank official.

Key Takeaways

  • HDFC Bank to raise up to ₹60,000 crore via debt instruments in FY25.
  • Bank's net profit for Q4 FY24 stood at ₹16,511 crore, up 0.84% QoQ.
  • Net interest income increased to ₹29,007 crore from ₹28,470 crore QoQ.
  • Bank announced a special dividend of ₹19.5 per equity share of ₹1.
  • Fundraising aims to bolster financial position and support future growth.