HDFC Bank (US:HDB)2024-10-21 21:12Financial Data and Key Metrics Changes - The profit after tax grew to INR 16,800 crores, reflecting an optical growth rate of 5.3%, but an adjusted growth rate of 17% when accounting for bond gains and tax adjustments from the previous year [5] - The average assets under management increased by approximately 10.2% year-on-year, with stable margins reported at 3.46% [5] - The gross non-performing assets (NPA) remained stable at about 1.4%, with gross slippages at 1.2%, which is an improvement compared to the same period last year [5] Business Line Data and Key Metrics Changes - Fee income reached INR 8,000 crores, growing by 17% year-on-year, with third-party product distribution growing by 32% [7][8] - Retail loans grew by 11.7% year-on-year, while non-mortgage retail loans grew by 11% year-on-year [18][25] - Priority sector loans grew by 4% sequentially, indicating a growth rate of 16% to 20% [18] Market Data and Key Metrics Changes - Deposit growth averaged around 15% year-on-year, with retail branches contributing approximately 84% of total deposits [4] - The liquidity coverage ratio (LCR) increased to 128, up from 123 in the previous quarter, driven by an increase in granular retail deposits [35] Company Strategy and Development Direction - The company aims to reduce the loan-to-deposit (LDR) ratio to the mid-80s over the next two to three years, adjusting its strategy based on credit growth and deposit growth rates [16][20] - The management emphasized a focus on maintaining asset quality while preparing for potential changes in the credit environment over the next few years [20][42] Management's Comments on Operating Environment and Future Outlook - The management noted an improvement in liquidity but acknowledged that deposit rates remain elevated, impacting credit growth [3] - There is a cautious optimism regarding the future credit environment, with the management expressing confidence in their positioning to capture growth when the cycle turns positive [41][42] Other Important Information - The company is preparing for the IPO of HDB Financial, which is required by regulatory guidelines by September 2025 [12][14] - The management highlighted that the draft regulations from the RBI are still under review, and feedback has been provided [12][37] Q&A Session Summary Question: Is there any securitization income in fees? - The fee income grew by 17% year-on-year, with strong growth in third-party products, but securitization income is not included in fees [7][8] Question: What is the status of contingent provisions? - There was a release of contingent provisions due to regulatory clarifications, which allowed for a reduction in previously reserved amounts [10] Question: What is the impact of RBI's draft circular on HDB Financial? - The management stated that the draft is still under review, and they will provide feedback before the final guidelines are issued [12] Question: What is the trajectory of the liquidity coverage ratio? - The LCR has increased to 128, driven by more granular deposits, and the management is monitoring the situation closely [35][36] Question: What are the thoughts on credit quality? - The management expressed confidence in their asset quality, stating they are well-positioned to manage risks and capture growth opportunities [41][42]