This April, the country’s top private lender announced its merger with HDFC to create a financial behemoth. The deal is expected to take 18-24 months to complete.
“HDB Financial Services is a financial investment. With the announcement of the merger, we are still awaiting directions from the regulator as to what is the status of holding in these companies. We will be able to decide on the future plan over a period of time as and when we get approval from RBI for the merger, their directions on the investment," said Jagdishan at the bank’s annual general meeting on Saturday.
“Large part of HDFC Securities customers are customers of the bank. Brokerage is a product offering of this group. Here we would like to maintain majority holding in this company because it complements our product offering. Whether at current level 95% or monetized to some extent, is something that we will take a decision on as we progress," he added.
HDB Financial Services is the NBFC arm of HDFC Bank.
Jagdishan also said that the bank would consider raising long-term liabilities after the merger is approved. The bank’s asset-liability committee (ALCO) will take the appropriate decision on raising the maturity profile of its liabilities.
“Large deposits are up to the three-year bucket. While we may have 75% of corporate loans in long-term buckets. We already have AT1 bonds, capital which is long-term. With the impending merger, the bank will start thinking of raising long-term deposits. The ALCO will think about it at the appropriate time," he said.
Separately, in an investor call, HDFC Bank said that it had to let go of ₹50,000 crore of wholesale loans to competition after it raised interest rates in May.
Despite this, the bank saw a credit growth of 21.6% from a year earlier to ₹1.39 trillion. Within this, the retail loan book grew 21.7%, while the corporate loan book increased 15.7%.
The private sector lender registered a 14.5% increase from a year earlier in net interest income (NII) to ₹19,481 crore. Net interest margin stood flat at 4% of total assets.
The bank reported a 19% growth from a year earlier in standalone net profit at ₹9,196 crore in the quarter ended June, after providing ₹2,984 crore towards taxation. During the same period last year, net profit stood at ₹7,729.64 crore.
As of June end, HDFC Bank’s gross non-performing asset ratio was at 1.28%, lower than 1.47% a year earlier. On a sequential basis, however, the gross NPA ratio rose from 1.17% a quarter ago. The net NPA ratio was at 0.35% as on 30 June compared to 0.48% in the year-ago period.
Other income remained flat from a year earlier at ₹6,390 crore due to the impact of a treasury loss of ₹1,300 crore. However, excluding trading income, other income rose 35.4% from a year earlier, thanks to higher fee income.
