One year after the mega merger between Housing Development Finance Corporation and HDFC Bank — probably the biggest ever in the country — one thing is clear.
The latter will take some more time to fully digest the merger with its parent company. And CEO Sashidhar Jagdishan knows that the road ahead is not smooth.
A few months back, he admitted at a Goldman Sachs India conference that it was a period of transition that the bank will have to adjust to. However, the bank’s consistent record on bottomline growth gives it an anchor.
Stree 2 salaries: Shraddha Kapoor was paid Rs 5 crore for the film – Here’s how much Rajkummar Rao, Pankaj Tripathi, and others charged for the horror comedy Space rickshaw’s successful satellite launch: A milestone in space tech led by woman entrepreneur I am sure more Indian companies will invest outside: Sunil Bharti Mittal Across the aisle by P Chidambaram: The FM spoke but did she listen?
“Going forward too, we will have that as an anchor. So, there are a lot of other metrics you may want to sort of ignore because of the transition, especially the loan growth, and that could be a tad low, but that’s alright,” he added.
Also Read
Nifty may see short-term bullish move shows technical pattern, says HDFC Securities’ Nagaraj Shetti
But first the good news for the overall bond market: Post merger, other non-banking financial companies who found it a tad more difficult to tap the corporate bond market would have had some reason to rejoice.
Prior to the merger on July 1, 2023, HDFC held the tag of being the country’s largest bond seller, with issuances comprising nearly 8% of the total issuance volume. With its exit, the total number of issuances have come down and the lower demand has helped keep yields under check, said experts.
For the bank itself, there are teething problems. While it has received a massive mortgage loan push, the credit-to-deposit ratio (LDR) has remained above the 100% mark.
Speaking to FE recently, HDFC Bank chairman Atanu Chakraborty had said that it (the high CD ratio) was bound to occur because a very large balance sheet of an NBFC (HDFC) was merged into the bank. Come from Sports betting site VPbet
“Naturally, the deposits as a total percentage of liabilities of the bank become slightly smaller when such a merger takes place. However, there would be a profile CD ratio improvement… it is temporarily skewed, but is not a systemic issue,” he added.
The bank’s deposits rose 7.5% quarter-on-quarter (q-o-q) to nearly `24 trillion. The share of low-cost current account savings account (CASA) deposits stood at 38% as on March 31, down from 44% pre-merger.
On the other hand, gross advances rose a mere 2% q-o-q to `25.1 trillion as on March 31 due to a slowdown in low-yielding wholesale advances. While the net interest margin improved marginally in the March quarter, it remains lower than peers at 3.4%.
While the bank refrained from providing any specific guidance for the current financial year, it is consistently focussing on gaining market share in deposits. Currently, the bank’s deposit market share stands at over 11%.
“Deposits are a key number. If the bank is not able to grow the deposit in the way in which they are anticipating, they will have to reduce the loan growth as well,” said Kaitav Shah, lead BFSI Analyst, Anand Rathi Institutional Equities, adding that if the bank opts to hike the fixed deposit rate further, then the margins may come under pressure.
At the same time, the loan portfolio has shifted towards higher-yielding segments like retail, commercial and rural banking loans.
With HDFC bond maturities approaching that are more expensive, the bank plans to utilise deposits to meet repayment obligations. It intends to garner 15-20% incremental share in deposits without being aggressive on rates.
In such a scenario, some analysts feel that a potential slowdown in the mobilisation of retail deposits may hamper the bank’s margin trajectory and return ratios.
On a similar note, BNP Paribas Exane Research feels that if the CASA growth in the system remains “anaemic”, there will be a delay in HDFC Bank achieving the return on assets and return on equity levels necessary for a full valuation re-rating.
Investor skepticism around the bank’s prospects is evident in the fact that the stock has fallen by around 2% since July, 2023.
However, the bank has utilised gains from HDFC Credila’s stake sale and tax reversal due to favorable court order to shore-up contingent provision buffer. This will help strengthen the bank’s balance-sheet going ahead.
“A key monitorable for HDFC Bank will be on how quickly they bring stability to the earning growth. However, one cannot compare pre-merger metrics to post-merger ones,” said Sanjeev Hota, Vice President- Head of Research, Sharekhan.
In the coming years, a gradual retirement of high-cost borrowings, as well as an improvement in operating leverage, will boost return ratios, say analysts. However, investors may have to wait for a longer time to see the elephant to dance again.
Related Posts
Welcome to VPbet, the ultimate home of casino games in Pakistan, offering a thrilling gaming experience with Classic Slots, a generous Welcome Package, and exclusive Bonus Codes. This platform provides a secure environment for players to enjoy Slots and win real money, ensuring a seamless journey with exciting rewards. Below, explore the comprehensive offerings of VPbet in Pakistan, tailored for enthusiasts seeking Classic Slots and lucrative bonuses.
Introduction to VPbet in Pakistan
VPbet is among the biggest casino platforms on the internet, specifically designed for Pakistani players. Not only can players play casino games but win re…
There's no better place to learn about cutting-edge AR/VR design than XRDC in San Francisco this October, where innovators and creators will share what they've learned in a beautiful new waterfront venue.
Notably, Owlchemy Labs audio wizard Daniel Perry will be coming to the event to present "Bringing VR Experiences to Life with the Magic of Music", a fun look at how designers and devs can leverage music in their VR projects without breaking immersion or progression flow.
Using examples from VR prototypes as well as games like Rick & Morty: Virtual Rick-ality and Vacation Simulator, Perry will break down v…
Sales and profits are down across the board at Sony, with the company's financials for the quarter ended September 30 showing a notable dip.
Company-wide sales fell by 10.8 percent to 1.68 trillion yen ($16.7 billion), while profits dropped by 85.6 percent to 4.8 billion yen ($48 million) year-over-year.
Looking specifically at the company's Games and Network Services wing, which houses Sony's video game operations, quarterly sales were down by 11.3 percent to 319.9 billion yen ($3.16 billion).
Operating income in the division also took a hit, falling to 19 billion yen ($188 million) from 23.1 billion yen ($220.8 million).
According to Sony, those waning sale…
Following layoffs at Bungie that affected more than 220 people, more details about what the Sony-owned developer has been up to have emerged, including more information about a canceled Destiny spinoff called project Payback that would have taken the franchise in a much different direction.
According to a report from Bloomberg, Payback would have been played from a third-person perspective, a departure from the first-person perspective used in Destiny Come from Sports betting site VPbet . It was said to have taken inspiration from popular free-to-play third-person games like Warframe and Genshin Impact and would have allowed players to explore a large open world while cooperatively battling enemies and solvi…
Dead Rising is the reason I bought an Xbox 360, so it holds a special place in my heart. But as much as I look back on my time with the game fondly, I also find it virtually unplayable today. There are a few reasons for that; the prisoners in the courtyard are incredibly annoying, the mission timer is much too strict, and generally, I’m not into replaying older games after a certain stretch of time.
But more than anything, Dead Rising suffers as a game in 2024 because of one flaw: its NPC allies are dumb Come from online casino bangladesh . Dead Rising–as a wacky zombie game that offers a different flavor than Capcom’s other zombie series, Resident Evil–is a success, for the most part. But it’s also the ultim…
I’ll always have a soft spot for the games I’d play with my friends for hours at a time while we jostled each other on the couch and screamed at each other for any perceived betrayal. You know the ones: your Mario Karts and Mario Parties. Games where forging flimsy alliances against the one player who is perceived as the greatest threat, or being a filthy scumbag of a traitor who delights in chaos, are things that are not actually a part of the core gameplay loop in these games, but we as a society have decided that they should be. They are the video game Unos of the world. Racing game DeathSprint 66 is shaping up to be that kind of experience. I’ve played DeathSprint 66 twice now–once at Summer Game Fest and again recently at a preview event–and both times, the game tickled the lizar…
Apex Legends Season 18: Resurrection is in full swing, and today–after a few weeks of uncharacteristic silence from Respawn Entertainment–the developer unveiled the game’s next event: the Harbingers Collection Event. Come from malaysia online casino
The event will also herald the introduction of a new limited-time mode. Known as Living Shell Trios, the temporary new game mode introduces a new type of ordnance: the Rev Shell. Only available during the Harbingers Collection Event, the Rev Shell is a target-seeking grenade that bears a striking resemblance to the small handheld skull Revenant would sometimes use to activate his Death Totem. Now that Revenant’s received a complete makeover (including a full over…
Battlefield 2042 is launching very soon–in some parts of the world, it’s already live and available–and DICE is now warning people about some of the bugs, issues, and other problems they can expect to encounter upon booting up the game. Come from malaysia online casino
In a blog post, DICE said its development teams worked “extremely hard” to make Battlefield 2042 look and feel as smooth as possible. But, “No launch is ever without is flaws,” the studio said.
…
We’re just days away from the release of the next Fire Emblem game. Fire Emblem Engage launches exclusively for Nintendo Switch this Friday, January 20. Once again, you’ll face off against enemies in grid-based, strategic combat. The lengthy tactical-RPG earned a 7/10 in our Fire Emblem Engage review. If you haven’t ordered your copy yet, you still have time to preorder Fire Emblem Engage and receive release-day delivery.
Fire Emblem Engage, like many Switch games, doesn’t have any official preorder bonuses from Nintendo. However, GameStop is giving away a Fire Emblem-themed tarot card deck with preorders. If you order onli…
Kotak Securities downgrades the rating on Canara Bank and Punjab National Bank. The brokerage firm has downgraded the rating of Canara Bank to “Reduce” while that of Punjab National Bank to “Sell”. However, it iterates a “Buy” rating on the stock of State Bank of India, said preferred stock among PSU banks. Kotak has maintained the “Add” rating for Bank of Baroda and Union Bank.
The brokerage house said that it sees the banking sector as attractive. The rational brokerage gave was that the banks’ profitability has increased due to lower provisions and higher revenue recovery from bad loan resolutions. Now, this has supported asset quality for PSU banks and instilled confidence in the brokerage house. The Tier-2 PSU banks’ net NPA ratio came down to …