In This Article:
-
Credit Deposit Ratio: Reduced from 110% at the time of merger to 96% as of March 2025.
-
Deposit Growth: Deposits have grown faster than the system and loans.
-
Cost Management: Costs remain under tight control.
-
Asset Quality: Asset quality remains pristine.
Release Date: April 19, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
-
HDFC Bank Ltd (NYSE:HDB) has successfully reduced its credit deposit ratio from 110% to 96%, indicating improved financial stability.
-
The bank's deposits have grown faster than the system and its loans, showcasing strong deposit mobilization.
-
Asset quality remains pristine, which is a unique selling proposition for HDFC Bank Ltd (NYSE:HDB).
-
The bank is well-positioned to benefit from technological advancements, which are expected to enhance productivity and efficiency.
-
HDFC Bank Ltd (NYSE:HDB) has maintained a stable net interest margin (NIM) within a narrow band, demonstrating effective financial management.
Negative Points
-
The global macroeconomic outlook remains uncertain due to trade tariff-related measures, potentially impacting growth.
-
There is a concern about the impact of geopolitical uncertainties on corporate deposits, which are short-term in nature.
-
The bank faces challenges in meeting priority sector lending requirements, particularly in the small and marginal farmer segment.
-
There is intense competition in the lending market, particularly from public sector institutions offering low pricing.
-
The bank's CASA ratio has been adversely affected by customer preference for time deposits, impacting cost of funds.
Q & A Highlights
Q: Can you explain the drivers behind the NIM expansion this quarter and how it might progress over the next year? A: Srinivasan Vaidyanathan, CFO, explained that the NIM operated in a narrow band of 3.4% to 3.5% over the last year. The cost of funds remained stable due to a decrease in borrowing mix and selective retail deposits. The yield on assets was also stable, and the bank managed margins through appropriate selection and quality of loans. The NIM is expected to remain stable over a longer period, despite policy rate changes.
Q: How does the bank plan to manage deposit growth given the recent rate cuts and liquidity changes? A: Srinivasan Vaidyanathan, CFO, stated that the bank is confident in its ability to grow deposits through distribution reach and customer engagement, rather than relying on rate differentiation. The bank aims to maintain a healthy deposit growth rate, leveraging its market share and customer relationships.