HDFC Bank: The turnaround story investors need to verify

HDFC Bank Limited (HDFCBANK) is back in focus as brokerages turn increasingly constructive on its recovery prospects. The appointment of Anup Bagchi as the next Managing Director and Chief Executive Officer has reduced one source of uncertainty, but the bigger question remains: can the bank convert balance-sheet growth into stronger profitability? What is changing? The bank has been working to improve deposit mobilisation and restore a healthier relationship between loans and deposits. Its latest September-quarter business update showed advances rising 16.3% year on year to ₹32.20 lakh crore, while deposits increased 18.8% to ₹33.28 lakh crore. Deposit growth outpaced loan growth, which is encouraging from a funding perspective. Three numbers I would prioritise . Net interest margin:** Faster deposit growth is useful, but the cost of those deposits will determine how much benefit reaches earnings. 2. CASA ratio:** Low-cost deposit growth remains important for protecting profitability. 3. Return on assets:** This will help establish whether operational improvements are translating into better returns for shareholders. Where the opportunity lies Several brokerages have a positive view of HDFC Bank, with their price targets reflecting expectations of a recovery. However, those targets are forecasts, not guaranteed outcomes. view is that the next set of financial results matters more than the optimism surrounding the leadership transition. If margins stabilise and asset quality remains healthy, the recovery case becomes stronger. If funding costs continue to weigh on profitability, investors may have to wait longer.