Synopsis: HDFC Bank's Managing Director, Sashidhar Jagdishan, emphasizes a cautious approach, prioritizing stability over aggressive growth in the wake of the bank's merger with HDFC. Despite a decline in share value, HDFC Bank remains the most valued bank in the market.
HDFC Bank's Managing Director, Sashidhar Jagdishan, underscores the priority of stability over aggressive growth, projecting a positive outlook for the next 2-3 years post-merger. The focus is on maintaining quality and implementing a gradual growth strategy. Jagdishan aims to raise ₹60,000 crore through infrastructure bonds to streamline costs.
During discussions with analysts following the bank's Q4 results declaration, Jagdishan emphasized a cautious approach, stating that growth will not be pursued at the expense of stability. While declining to provide specific guidance, he expressed optimism about the bank's growth trajectory in the coming years. He likened the bank's transitional phase post-merger to the construction of Mumbai's coastal road, acknowledging the challenges but foreseeing eventual benefits.
Jagdishan anticipates favorable outcomes akin to the coastal road's completion, where reduced borrowing and enhanced funding momentum will fuel growth. Throughout this period, the bank aims to maintain stable profitability metrics while striving for positive growth momentum over the medium term.
Before the merger with HDFC, HDFC Bank's margin ranged from 4.1-4.3%, which narrowed to 3.4-3.6% post-merger. Despite a 8% decline in share value over the past year, HDFC Bank remains the most valued bank, boasting a market capitalization of ₹11.6 lakh crore.
In its Q4 report, HDFC Bank disclosed a net profit of ₹16,510 crore, up 37% from the previous year, driven largely by the sale of stake in its education loan subsidiary. For the fiscal year, the bank recorded a net profit of ₹60,810 crore, reflecting a 38% increase.
Jagdishan reiterated HDFC Bank's commitment to prioritizing quality over quantity in both assets and liabilities. The bank adopts a cautious stance in response to risk indicators, opting for slow growth when necessary and relinquishing market share in the face of heightened competition.
Regarding margins, Jagdishan expressed contentment with stability, highlighting the importance of maintaining a controlled cost of incremental deposits. The bank's margin movements are expected to be influenced by its business mix, particularly the proportion of retail and commercial banking.
Finally, HDFC Bank announced plans to raise ₹60,000 crore through infrastructure bonds, aiming to lower its cost of funds and satisfy regulatory requirements such as statutory liquidity ratio and cash reserve ratio.
