HDFCBANKNSEQ1 FY2023July 21, 2022

HDFC Bank Limited

9,106words
48turns
6analyst exchanges
1executives
Management on call
Srinivasan Vaidyanathan
CFO – HDFC BANK
Key numbers — 40 extracted
90 basis point
es PMI, etc., etc., show robust opportunities in the economy. The RBI raised the policy rate by 90 basis points in the quarter taking the repo rate to 4.9. The Monetary Policy Committee also voted to remain f
3.2 million
July 16, 2022 product offering in most of our branches. Payment acceptance points have grown to 3.2 million a year-on-year growth of 42%. Wealth management is now offered in 357 locations through hub and s
42%
ost of our branches. Payment acceptance points have grown to 3.2 million a year-on-year growth of 42%. Wealth management is now offered in 357 locations through hub and spoke model, we have expande
2.6 million
r, we added 10900 plus people and 29,000 people over the past 12 months. Our people have acquired 2.6 million new liability relationships in the quarter, exhibiting a phenomenal growth of 59% over the same
59%
cquired 2.6 million new liability relationships in the quarter, exhibiting a phenomenal growth of 59% over the same time last year and 10% over prior quarter. We have also acquired 1.9 lakh MSE acc
10%
ationships in the quarter, exhibiting a phenomenal growth of 59% over the same time last year and 10% over prior quarter. We have also acquired 1.9 lakh MSE accounts in the quarter. On cards, we have
1.9 lakh
al growth of 59% over the same time last year and 10% over prior quarter. We have also acquired 1.9 lakh MSE accounts in the quarter. On cards, we have issued 1.2 million new cards during the quarter hi
1.2 million
ior quarter. We have also acquired 1.9 lakh MSE accounts in the quarter. On cards, we have issued 1.2 million new cards during the quarter highest ever with a 47% growth over prior quarter. Total card base
47%
he quarter. On cards, we have issued 1.2 million new cards during the quarter highest ever with a 47% growth over prior quarter. Total card base now stands at 17.6 million. Moving on to next, our f
17.6 million
ring the quarter highest ever with a 47% growth over prior quarter. Total card base now stands at 17.6 million. Moving on to next, our focus on the granular deposit. Deposits at 16,04,000 Crores increased b
16,04,000 Crore
e now stands at 17.6 million. Moving on to next, our focus on the granular deposit. Deposits at 16,04,000 Crores increased by approximately 46000 Crores in the quarter as against an addition of approximately 1
46000 Crore
next, our focus on the granular deposit. Deposits at 16,04,000 Crores increased by approximately 46000 Crores in the quarter as against an addition of approximately 11000 Crores in last year June quarter.
Advertisement
Guidance — 12 items
Srinivasan V
opening
“This is in accordance with our plan to take this to deeper geographies in over 900 locations in the current financial year.”
Srinivasan V
qa
“My last question is on EBLR repricing, so basically your reset for retail and corporate loans will be what three months, one month.”
Srinivasan V
qa
“So we expect that with the pickup for that is taking place right now we need to give some more time for that to do and similarly on the revolve rates you do not, but I am sure another person would be thinking about asking so I would allude the same thing.”
Hardik Shah
qa
“Got it as a follow-up to that what are your thoughts on the sustainable revolve rate going forward in the industry.”
Srinivasan V
qa
“HDFC Life is currently a subsidiary of HDFC Limited and it is envisaged that a merger that it will be a subsidiary of the bank.”
Kunal Shah
qa
“But there are no timelines in terms of where can we expect, so the process is still on the communication is still on.”
Kunal Shah
qa
“So when do we expect is it post like consummation of the merger do we see that run rate or we will start preparing for it from this fiscal and it will be more back ended and second related question is on the PSL build up.”
Srinivasan V
qa
“So that is how decisions are done and when we did not do retail we have done more of the other things that will happen and then we do more of retail there will be more of organic that comes up.”
Kunal Shah
qa
“Sure so PSLC what we bought 100000 Crore maybe with HDFC it is that there is a scope for this to go up substantially from here on because 80000 has already gone up to 1 lakh last year and maybe with this requirement I think there will be more and more maybe purchase of PSLC which could happen.”
Srinivasan V
qa
“So just the repricing on the repo or receivable, it also happens in the cost of funds, but then we do expect that the tailwind of the rates going up and if you think about the second aspect on the NIM that you asked in terms of the fixed and the variable about 45% of the book is fixed and the 55% is floating rate and some of them out of the 55%, 48% which is 27%, 28% of the total book is repo and a quarter 13%, 14% of the total bank book is achievable.”
Risks & concerns — 5 flagged
Activity indicators released during April to June quarter indicates that economic activity continues to hold up well despite global risk.
— Srinivasan V
Stage 3 as of June end stood at 4.95% after factoring in 1.18% impact of new RBI guidelines issued in November reflecting sustained healthy collections.
— Srinivasan V
Again from a return on asset point of view 1.8% excluding the impact of the trading and mark-to-market it is slightly over 2% with an ROE of 17%.
— Srinivasan V
See over a period of two years both either in our bank or in some other bank people who were call it for lack of some other chronic revolvers that means habitually revolving for more than six months, nine months out of the 12 months have come down because either they are having a bad score in the bureau or they are having a bad score with us and we have utilize their limits so we are not entitled on the limits are not given because we want to be cautious.
— Srinivasan V
So what is the risk there given credit cost to income as of now it looks like it is most of the segments and what is foreseeable in future
— Adarsh
Advertisement
Q&A — 6 exchanges
Q
First let us talk about the CRB loans that you talked about. This year the loans had a robust growth of about 28%, 29% year-on-year in the quarter and we do have aggressive plans across various segments in CRB both on the MSME side as well as well as on the agri side on both sides where we have a significant growth. This growth I think we talked about it maybe a month ago in another forum that growth is predicated on one geographic expansion, we want to be present in more districts in the country to be able to capture the supply chain and the distribution chain flows. That is part of what we a
Srinivasan V
Good point, yes, I did mentioned that and I specifically mentioned that I know that you will pick it up and ask, which is see there was a rate dislocation in the quarter sometime around starting May the rate started to move up there was a rate dislocation immediately after our bank and so also others started to move up on the rates and we did that and as we move up on the rate, there were some customers who were offered lower July 16, 2022 rates by certain other market participants and we do not want to cut back on our rates to keep them. We said that is fine because we do have a relationship,
Q
Hi! Sir, congratulations for a good quarter. My first question is on the MTM loss. Can you share some color on AFS mix modified duration and under what circumstances one can use the IFR.
Srinivasan V
Thank you for bringing this up. See the AFS book broadly you can think about this at three components, broadly three components. One is the corporate bonds; the other is the participation certificate primarily in priority sector lending participation certificates and the third one is the Government of India’s security. These are the three broad components which are there. Most of these the other aspect that you asked about is the modified duration and how you think about it. See about for two years you can think about it is the tenure of the duration and that is the time it takes to pull this
Q
Hi! Srini and team, thanks for taking the question. Firstly again just coming on with respect to the RBI’s approval, so any indication with respect to HDB Financial, so when we look at it in terms of the scheme of arrangement it says it has approved so would be hear further with respect to HDB and HDFC Life or it is more or less there within the arrangements scheme. July 16, 2022
Srinivasan V
Good, thank you the other question I did not address. First the RBI approval is no objection to The Scheme of Amalgamation that has been filed. The Scheme of Amalgamation does not have a role for HDB there. HDB is a subsidiary, existing subsidiary of the bank and continues to be there and so the scheme of amalgamation does not have anything to do with HDB and so that is, if anything we need to do, the separate conversation is the separate process and so on. So it is not combined with this scheme, we find the scheme and the scheme does not have anything to do with HDB. HDFC Life is currently a
Q
So just on the cost side any sense, it clearly is you are an investment mode in branches and employees. So any path towards cost to income over the next couple of years.
Srinivasan V
Good, thank you for asking, but one thing normally resist from giving July 16, 2022 forward guidance on many things. But let me talk through so you will get an idea of what previously we have talked and our thought process so you will factor that. One from a top line point of view the growth is picking up, you have seen that over a period of time that the top line growth, the top line means I meant the volume growth was anyway there, but the mix is also we will see like this quarter and similarly last quarter the mix is also changing to get that the top line revenue interest income, our intere
Q
First on the NIM the repricing starts, it started in May and there is a cycle, there is at least a three-month cycle and some of them are a six-month cycle in terms of what happens. So that is on the NIM and so it is not just that, it has also got to do with the deposit cost. So just the repricing on the repo or receivable, it also happens in the cost of funds, but then we do expect that the tailwind of the rates going up and if you think about the second aspect on the NIM that you asked in terms of the fixed and the variable about 45% of the book is fixed and the 55% is floating rate and some
Srinivasan V
From a NIM point of view it is also rightfully you are focused on the mix because that is what makes it right because individually things can go if the mix do not come it takes a little more longer time. The mix as we speak now is still at 45-55, although the retail grew at 5% and the corporate was zero and the CRB was 2.7% sequentially. The mix is more or less the July 16, 2022 same, one quarter does not take it, it takes a few quarters for the mix and last quarter we put out the chart in terms of how long it took for the mix to come retail 55% how long it took for that retail to come to 45%
Q
Thank you Faizan and thank you to all the participants who dialed in today. If you still have more questions or need any clarifications feel free to get in touch with the investor relations team, we will be happy to engage. Thank you with that we will sign off for today.
Management
Speaking time
Srinivasan V
25
Moderator
8
Hardik Shah
5
Kunal Shah
5
Adarsh
5
Advertisement
Opening remarks
Srinivasan V
Thank you Faizan, appreciate. Good evening and warm welcome to all the participants. We can get started with provide the context on the environment that we operated in the quarter, so that gives the backdrop of what was going on. Much of this quarter has been about inflation and price surges as you know. Energy and fuel have been at the center, supply chains have been disrupted, which created a major demand in supply gap. As we progress further in the year, we will keep a careful watch on the development. We see opportunities in the marketplace in the current environment supported by dynamic fiscal and monetary policy. Activity indicators released during April to June quarter indicates that economic activity continues to hold up well despite global risk. GST collections, manufacturing PMI, IIP, credit, rail freight, services PMI, etc., etc., show robust opportunities in the economy. The RBI raised the policy rate by 90 basis points in the quarter taking the repo rate to 4.9. The Moneta
Advertisement
← All transcriptsHDFCBANK stock page →