HDFC Bank published its FY25 Annual Report ten days ago, and it is the most important document the bank has released since the merger closed. What follows is an analyst's read of the report, focused on the eight footnotes that tell you the merger integration is genuinely finished digesting.
The reported numbers are known. Net Interest Income up 21% year-on-year. NIM at 3.45% versus 3.38% the previous year. Cost-to-income ratio down 120bps to 39.8%. All strong, all consistent with what management guided to on the Q4 FY25 call. The report itself, however, tells you three things the earnings release could not.
The deposit mix is finally recovering
The single biggest overhang from the merger has been the post-merger CASA ratio, which fell from HDFC Bank's pre-merger 44% to a low of 34.5% in the first year. In the FY25 report, CASA is back to 38.4%. That is still a full 500bps below pre-merger levels — the mix has not fully normalised — but the trajectory is unmistakable.
Why does it matter? Every 100bps of CASA improvement is worth roughly 12bps to NIM at the current asset base. If CASA gets back to 41–42% over FY26–FY27, that's another 40bps of NIM upside sitting quietly in the deposit mix.