HDFC Bank conducted
a conference call on 20 April 2024 to discuss the financial results for the
quarter ended March 2024. Sashidhar Jagdishan, MD&CEO of the bank addressed
the call:
Highlights:
Post merger of HDFC
Limited, HDFC Bank is completely new organization. There is a new starting
point across all metrics. There is need to avoid any comparisons with the earlier
bank as well as HDFC Limited.
Nine months post
merger, the core metrics have remained stable, which demonstrates the
underlying resiliency and the energy of the franchise. The resiliency of the institution
continues despite a very adverse macro conditions.
The key focus over
the medium to long term (2 to 3 years) is on improving profitability
metrics like the RoA and the earnings per share by ensuring the sustainability
of deposit franchise, especially the retail deposit franchise.
The bank will
continue to invest in distribution, people and technology. The operating
leverage will be harnessed over a period of time using enhanced tech and
digital infrastructure.
The focus is on
quality which is a balance between risk and margins.
During the times of heightened
competition or irrational competition both on the liabilities and asset side,
the bank would be happy to give up that kind of a share.
The bank has continued
to gain market share in deposits and also kept the cost of deposits stable. The
cost of incremental deposits continues to be range bound
The advances mix is
more towards better yielding segments like retail and CRB.
The asset quality
continues to be very pristine across all portfolio segments. Early indicators continue
to be benign.
The bank expects incremental
loan to deposits ratio will be lower for a couple of years. It would maintain stability
in margins through others levers offsetting the impact of lower loan deposit
ratio going forward.
The bank has control
on asset and liability movements. The margins movement should be a function of
how the bank substitute bonds that come up for maturity over a period of time
with deposits.
The bank has
witnessed one-off gains during the quarter, which has been utilized to create one-off
provisions.
The bank has created
floating provisions of Rs 10900 crore in Q4FY2024. This floating provisions
does not reflect anything adverse in the portfolio and it is only for getting
the balance sheet stronger.
These provisions also
qualify for Tier 2 Capital classification within regulatory limits. These floating
provisions amount to 59 basis points.
The ex-gratia
provisioning of Rs 1500 crore for employees is for motivating the workforce.
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