HDFC Bank (HDB) - 2021 Q4 - Annual Report

Company Strategy and Services - The company aims to be the preferred provider of financial services across metro, urban, semi-urban, and rural markets in India[27] - The retail banking segment includes deposit products, loans, credit cards, and insurance products, while wholesale banking offers financing products and investment banking services[28] - The company's treasury operations manage the balance sheet and include advisory services related to foreign exchange and derivative transactions[28] - The non-banking finance company subsidiary, HDB Financial Services Limited, offers a wide range of loans and asset finance products[28] - The company provides brokerage accounts through HDFC Securities Limited, which is one of the leading stock brokerage companies in India[28] - The company utilizes advanced technology platforms and superior execution to deliver high-quality services[27] - The company’s strategy includes providing a comprehensive range of financial products and services through multiple distribution channels[27] Economic Overview - Global growth slowed to 2.8% in 2019, with a further decline of 3.3% in 2020 due to the COVID-19 pandemic[29] - The IMF projects global GDP growth at 6% in 2021, with China and the United States expected to grow at 8.4% and 6.4%, respectively[29] - India's GDP contracted by 7.3% in fiscal 2021 compared to a growth of 4.0% in the prior year[30] - The fiscal deficit for fiscal 2021 was 9.3% of GDP, revised from a previous target of 3.5%[35] Financial Performance - HDFC Bank's net income increased from Rs. 260.3 billion in fiscal 2020 to Rs. 326.0 billion in fiscal 2021, representing a growth of 25.3%[36] - HDFC Bank's total assets grew from Rs. 15,961.9 billion as of March 31, 2020 to Rs. 17,979.8 billion as of March 31, 2021, an increase of 12.7%[36] - The bank's return on equity improved from 15.1% in fiscal 2020 to 16.1% in fiscal 2021[36] - The average cost of funds for HDFC Bank was 3.6% for fiscal 2021[36] - HDFC Bank's net interest margin was 4.4% in fiscal 2021, down from 4.6% in fiscal 2020[45] Branch and Customer Base - HDFC Bank had 5,608 branches and 16,087 ATMs/CDMs as of March 31, 2021, serving over 61.9 million customers[36] - As of March 31, 2021, the bank had 5,608 branches and 16,087 ATMs/CDMs across 2,902 cities and towns, with a focus on expanding in rural and semi-urban areas[51] - The bank operates 5,608 branches and 16,087 ATMs/CDMs across 2,902 cities and towns as of March 31, 2021, with plans for further expansion[69] Retail Banking Insights - Retail banking contributed Rs. 567,389.2 million (72.5%) to net revenues for the year ended March 31, 2021, while wholesale banking and treasury operations contributed 25.4% and 2.1%, respectively[67] - The bank's retail loans included 31.2% unsecured loans, which made up 65.0% of gross loans as of March 31, 2021[70] - The bank's auto loans accounted for 12.3% of total retail assets, valued at Rs. 964,053.2 million (US$ 13,180.9 million) as of March 31, 2021[72] - The bank's housing loans were valued at Rs. 702,235.5 million (US$ 9,601.3 million), representing 9.0% of total retail assets as of March 31, 2021[72] - The bank had approximately 15.0 million credit cards outstanding as of March 31, 2021, showing growth from 14.5 million the previous year[75] Technology and Digital Banking - The bank has implemented significant upgrades to its technology infrastructure to mitigate risks of outages, including tripling the capacity for unified payment interface (UPI) and doubling the capacity for net banking and mobile banking[77] - The mobile banking application is designed for efficient banking management, enabling functions such as money transfers and account management[154] - The internet banking platform allows customers to perform most banking transactions online, ensuring high security standards[155] - PayZapp offers a comprehensive digital payment solution for various transactions, including bill payments and loan applications[156] - Approximately 85% of the company's transactions are conducted on electronic platforms, reflecting a strong demand for digital banking services[128] Risk Management - The bank's gross non-performing customer assets at 1.70% of total customer assets as of March 31, 2021, indicating strong asset quality[55] - Credit decisions are primarily based on cash-flow assessments, with a significant portion of credit facilities secured by collateral[187] - Regular monitoring of accounts includes customer calls, plant visits, and credit reviews to detect early warning signals of credit quality deterioration[189] - Market risk management involves monitoring variables such as interest rates, credit spreads, and foreign exchange rates, with a focus on maintaining risk within appetite limits[192] - Liquidity risk is managed through both flow and stock approaches, tracking cash flow mismatches and measuring critical liquidity ratios[208] Corporate Social Responsibility - The bank aims to plant 2.5 million trees by the end of fiscal 2025, having already planted 1.6 million, as part of its ESG initiatives[57] Wholesale Banking - The wholesale banking products target leading private businesses and public sector enterprises, applying comprehensive credit risk policies[184] - The Wholesale Credit Group is responsible for managing credit exposure limits, which are reviewed annually or more frequently[186] - Total gross commercial loans reached Rs. 4,214,885.3 million as of March 31, 2021, with credit substitutes totaling Rs. 547,276.9 million[115] Customer Engagement and Services - The relationship managers in private and premium banking programs distribute mutual funds and insurance products, contributing to customer engagement[104] - The company has over 5.6 million customers engaged through virtual relationship management, utilizing AI technologies for customer service[159] - The company has begun implementing APIs across all products and services, enhancing customer experience and encouraging developer innovation[163]