HDFC Bank Limited

Ladies and gentlemen, good evening and welcome to the HDFC Bank Q4FY19 earnings conference on the financial results presented by Mr. Srinivasan Vaidyanathan, Deputy Chief Financial Officer. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after a brief commentary by the management. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Srinivasan Vaidyanathan. Thank you and over to you, sir.

Thank you very much. You all should have received a copy of the results released. Now, highlights for the quarter and year ended March 31, 2019. The bank's total income for the quarter ended March 31, 2019 at Rs. 31,204.5 crore grew by 22.1% from Rs. 25,549.7 crore in the corresponding previous year's quarter. Net revenues for the quarter amounted to Rs. 17,960.7 crore. Net interest income for the quarter was Rs. 13,089.5 crore registering a growth of 22.8%. The core net interest margin for the quarter was 4.4%. Other income for the quarter amounted to Rs. 4,871.2 crore, which grew by 15.2% for the corresponding prior year quarter. Looking at the breakup of the other income for the quarter, fees and commission income constituting 75.8% of other income grew by 10.9% to reach 3,692.1 crore. Effects and derivatives at 403.3 crores compared to 416.4 crores in the prior quarter, prior year corresponding quarter. Profit loss on investments were at 228.9 crores against a loss of 22 crores in the prior year corresponding quarter. Recovery and miscellaneous income at 546.9 crores grew by 8.4%. In summary, the total other income, as I said before, 4,871.2 crore grew by 15.2%. Operating expenses for the quarter were 7,117.1 crore, an increase of 17.6% over the corresponding quarter of the previous year. Core cost-to-income ratio for the quarter ended March 31, 2019, was 40.1%, against 40.6% for the corresponding quarter ended March 31, 2018. Total provisions were rupees 1,889.2 crore for the current quarter as against 1,541.1 crore for the corresponding quarter in the previous year. Profit before tax for the quarter ended March 31, 2019 was up 22.8% to rupees 8,954.4 crore. Net profit for the quarter grew by 22.6% to Rs 5,885.1 crore. Moving on to results for the year ended March 31, 2019. The bank earned a total income of Rs 1,16,597.9 crore as against Rs 95,461.7 crore in the previous year. Net revenues grew to Rs 65,869.1 crore as against Rs. 55,315.2 crore. Core net interest margin stood at 4.3%, and core cost-to-income ratio stood at 39.9%. Net profit for the year ended March 31, 2019 was at Rs. 21,078.1 crore, up 20.5% over the corresponding year ended March 31, 2018. Now for some balance sheet items. The bank's balance sheet size as of March 31, 2019 was Rs. 12,44,541 crore as against Rs. 10,63,934 crore as of March 31, 2018. Total deposits as of March 31, 2019 amounted to Rs. 9,23,141 crore, an increase of 17% over March 31, 2018. CASA deposits grew at 14%. Savings account deposits were at Rs. 2,48,700 crore and current account deposits were at Rs. 1,42,498 crore. Time deposits at Rs. 5,31,943 crore grew by 19.4% over previous year. CASA deposits comprised 42.4% of total deposits as of March 31, 2019. The bank's continuing focus on deposits helped in the maintenance of a healthy liquidity coverage ratio at 118%, well above the regulatory requirement. Total advances as of March 31, 2019 were rupees 8,19,401 crore. Domestic advances grew by 24.6% over the March 31, 2018 period. The domestic loan mix as per Basel II classification between retail and wholesale was retail 54%, wholesale 46%. Overseas advances constituted 3% of total advances. Coming to CAPAD network and asset quality, with regards to capital adequacy, total capital adequacy ratio as per Basel III guidelines stood at 17.1% as against a regulatory requirement of 11.025%. Tier 1 capital adequacy ratio was 15.8% compared to 13.2% in the previous year. As of March 31, 2019, The bank's distribution network was at 5,103 branch outlets and 13,160 ATMs across 2,748 cities and towns. 53% of the branches are in semi-urban and rural areas. Number of employees increased to 98,061 as of March 31, 2019. On the asset quality front, gross NPAs were 1.36%, as against 1.38% as of December 31, 2018, and as against 1.30 as of March 31, 2018. The coverage stood at 71%. Net NPAs were 0.4% as on March 31, 2019. The bank held floating provisions of 1,451 crore as on March 31, 2019. The provisions, which comprises specific provisions, general provisions, and floating provisions, where 117% of the gross non-performing loans as on March 31, 2019. Subsidiary summary results now. The financial results of the bank subsidiary companies have been prepared in accordance with notified Indian accounting standards, NDIS, with effect from April 1, 2018. April 1, 2017 being the transition date. The financial results for the comparative reporting period have also been prepared in accordance therewith. HDFC Securities Limited's total income was Rs. 782.1 crore as against 800.1 crore for the year ended March 31, 2018. Net profit for the year was Rs. 329.8 crore against Rs. 344.7 crore in the previous year. Total number of branches are 278 across 165 cities. Net profit for the year was Rs. 1,153.2 crore compared to Rs. 933 crore, registering a growth of 23.6%. HDB FSL had 1,350 branches across 981 cities. Growth-impaired loans were at 1.8% of gross loans and net-impaired loans were at 1.3% of net loans. Total capital adequacy ratio was at 17.9%, with the Tier 1 capital adequacy ratio at 12.8%. In closing, the consolidated results. Kindly note the bank's consolidated financial results include financial information of the subsidy companies based on the recognition and measurement principles as per Indian GAAP. Bank's consolidated net profit for the year ended March 31, 2019 was Rs. 22,332.4 crore, up 20.7% over previous year. Consolidated advances grew by 24.2% from 7,34,000 as on March 31, 2018 to 8,69,223 as on March 31, 2019. Now with that, hand this back to the operator to open it up.

Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to ask questions relevant to the financial results. Participants are also requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Abhishek Modi from Asit C. Mehta. Please go ahead. Hello.

Yeah, Abhishek.

Sir, just a first question. Can you give the figure of slippage for the quarter?

Yeah, just a moment.

The slippage for fourth quarter... is 3,577 crores. It was about almost 4,000 crores in third quarter of this year.

Thank you. The next question is from the line of Pawan Aluwalia from Laburnum Capital. Please go ahead.

Yes, thank you very much. Two questions. The first is, you know, to do with provisioning. So, you know, you talked about possibly higher provisioning coming in in June on the last con call because of the link to the agricultural cycle. And you'd also said that structurally because of the build out of the ag loan portfolio, we should get used to just a higher steady state rate of provisioning. Is, you know, if we were just to take the average of the last few quarters, is that uh you know how should we think about the new normal when it comes to slippages provisioning etc if you could give some color um you know that would be very helpful and also if you could there's been very strong growth on the non-retail side of things this quarter could you give us some sense of what it is that's driving that and what the implications are for that on yields and margins uh you know is this generally coming in at a blended yield below that of the overall portfolio and what does that mean for the outlook on NIMS going forward to the extent that this higher growth in the non-retail side is likely to persist?

Okay, on part one, which is on the fact that we did mention in the last call that Agri will continue to be a bit of a bother for us both in the June and the third quarter. at least we have visibility in the quarter ended June. So we have actually created some contingent provisions which is already embedded in the financials for that particular period. So there is a bit of a contingent credit provisions that we have created for that, anticipating a bit of a spurt in the AGRI delinquencies in June 2019. We created a portion of that in December 2018. So we have carried that and we have added some more in March 2019. As we said even in the past, we are not too sure how the environment will span out. Obviously we'll have to wait for the election results and we have to see what are the different kinds of announcements that happen on the debt waiver side. So, and also the fact that I believe SkyMet has also sort of given some not so encouraging forecasts on the monsoons for the year ended March 20. So we'll have to wait and watch how this stands about. So that's part one. Part two is on the non-retail front. Yes, we did have a bit of a spurt in the non-retail front. wholesale loan growth. Having said that, these are all short-term opportunistic assets. I wouldn't sort of give too much to the fact that it's a very high growth. So we have done a couple of NCLC cases. We would have done some short-term assets. We have seen a bit of a better utilization of the working capital limits. So yes, there has been a core momentum, but I would say that the last part of it, which has been a short-term opportunistic, which will run off in the next 30 to 60 days. Third part is on the, there were three questions. On the margin. So obviously, during the course of the year, we have been seeing a fair amount of strong growth in the AA and above corporates. So that has had an impact in the margins. So people keep on saying, in fact, let me answer that right away. While the proportion of unsecured has been growing up, the proportion of even the top end corporates have also been moving up as well. So the margins from the unsecured is actually being offset by the spread on the W and above corporate book.

Got it. Thank you. Thank you. The next question is from the line of Maru Katajania from IDFC Securities. Please go ahead.

Yeah, hi, just a couple of questions. Firstly, your retail growth has been slightly slower than previous quarters. So any comments? And also within retail growth, some comments on housing and CVs. Because, of course, you've not been as aggressive as others in growing the CV portfolio. But ironically, when CV sales are slowing, your CV growth has picked up. So that and even housing. So that's my first question. And my second question is on the movement of current deposits during the quarter. What really happened there? And also a related question on deposit rates. In general, retail deposit growth for the system has not been strong. So what drove your deposit growth? And how would you view our rates given that SBIS cut savings rates?

Okay, let me come to the retail growth. There are three parts to the retail growth. One is the core consumer assets growth, which comprises of personal loans, auto loans, two-wheeler loans. We'll talk about the commercial vehicles separately. Let's come to the unsecured book, which is the personal and business loans. We have seen some furious levels of growth even within the bank for the last two years. We had about almost 30% odd growth in the past two years, so there is a bit of a base effect which is playing off. Consciously, I think as it has been done over the last 25 years, whenever we had this kind of a growth rate, we normally pause and see how the portfolio behaves before we can further ramp it up. So this is a conscious strategy that is there which is a part and parcel of the architecture itself. Two is, we also sort of, in some of the other products, we were more conscious about the fact that the cost of funds was moving up, so we were very clear that we would do it only at a certain minimum yield. So we were happy to shave off some of the volumes in some of the other products, which is why we had a bit of a slowdown in the other products as well. On the commercial vehicle, And having said that, on the commercial vehicle, the growth rates, as you also alluded, has been pretty much in line with what is happening in the industry. We see that pretty much buoyant. In fact, the outlook in the TV markets as an industry seems to be pretty buoyant for fiscal year 20. But also, we must also sort of realize that the BA6 is also kicking in from first April 2020, so which probably may have a bit of a slowdown in the year 2021. So we may have some sales pre-poned in FI20 as well. But we are okay in the sense that our portfolio is pretty much stable, and I think we should see some buoyant sales happening there. The auto and two-wheeled, Wheeler, the prices have shot up, which has impacted the underlying sales significantly. And that is pretty much reflected in our books as well.

Housing.

Housing, yes. We have been distributing steady levels of housing loans to HDFC Limited, and we have been buying. In fact, we bought about Our growth rates in buying for the year is about almost 41% growth rate. Yeah, where we caught up on some of the backlog that we did not buy in the fiscal year 2018. So I think that continues to be pretty strong and we will continue to distribute and buy back at the same levels. The third one is on the deposits, retail current accounts and deposits which we mobilized in quarter four. Yes, we had a very strong quarter, but not as strong as what we mobilized in the quarter ended March 2018. We mobilized almost about 90,000 crores of deposits in March 2018. March 2019, I think the same quarter we mobilized about 70,000 crores. A large part of it is coming in from current accounts. These are very granular, both retail and wholesale have contributed. There have been some amount of short-term flows coming in from some corporates as well. There was bankers to issue which is also lying in the period ended March 19 as well. Having said that, the rates seem to be pretty much stable, especially on the less than two crore with the retail buckets. We are not participating so aggressively on the wholesale buckets in terms of rates. We are happy to, we are pretty much comfortable on the LCRs at 117%. So when we need it, probably we will step in to match some of the rates on the wholesale side. So, as I think you also mentioned about SBI dropping the interest rate savings rates. Was this announced? Or this is the one which they were contemplating effective first May? So that was in the hope that RBI will come up with the guidelines on the linking of rates to external benchmark. We'll have to wait and watch whether this becomes a reality or this is because we are still awaiting some final regulations from RBI on that.

Is the question answered, Maru?

Thank you, yes.

Thank you. The next question is from the line of Adarsh Paras Rampuria from Nomura Securities. Please go ahead.

Yeah. Hi, Sachi. Question again, getting back to deposit rates and more importantly, linking it to corporate growth, right? So what we're seeing is we're seeing slowdown in retail and that can persist because of BS standards changing. If we compare the retail term deposits, y'all are now 20, 30 BIP at least higher or maybe 40 BIPs in some buckets versus these are the PSUs. And that's also reflected in higher MCLRs of yours versus say a PSU, right? So I wanted to understand when you go in looking at the AAA market when you're trying and competing there, is that a source of problem, right? That you've been growing fast, so you offered higher rates. these are we say the top two three psus but when your mclrs are now higher than uh than than most you know the top three psu so and then all of them are probably growing as well so uh in this context is there a trade-off which you choose now uh margins over growth or how should one look at it i think the very fact that we've been able to maintain and in fact grow our margins a bit

reflects adequately that across products, across products, across customer segments, we have been able to maintain our yields. In fact, in some cases, it will increase our yield. So you're right. I mean, it's not so easy to compete with this kind of a pricing. But having said that, there is always, you know, one is we compete more on the working capital side, whereas some of them compete on the term side. Second part of it, obviously, we go in on a relationship basis, which means that we just don't compete just for only the loans. We want the entire relationship, which is one of our key objectives for quite some time for all our relationship teams, that they need to self-fund their own relationships as much as possible. So we go not with just one product. We go with multiple products, and probably when the customer sees that, it makes economic sense for him to do banking with us despite the slightly higher funding cost.

So, Sashi, just to follow up here, I'm just trying to understand which segments, right, at least when your MCLRs are now higher than, you know, say, PSUs and the top one or two private banks, where where you know obviously there's been the other uh effect of you know uh better pricing maybe in some segments because uh smes are not this i just want to understand which segments uh the pricing is holding up for you know uh so that you've been able to maintain margins right so your deposit costs may have gone up or will likely go up but you've been able to maintain margins so where is the pricing uh you know where is the maximum amount of improvement in pricing if you in the next in the last six months

So, a couple of things. Number one, while the pricing that we have laid out is for the working capital part of it, the same kind of a pricing is different for term even from a PSU bank. Okay, so effectively you cannot sort of link the MCLR pricing to a term pricing, which will be way, way different from what is available on the website, number one. Number two is, I think we are probably strong on the cash management on the trade front, which is what we give value services to the customer, be it in terms of the trade on net, be it in terms of the API integrations that we do with the customer. So not to mention the salary relationships as well. So carried as a basket, I think the value the customer gets or the perceived benefit that he has is much higher than what he would lose on the working capital front on the funding side. So I think if you see the track record of the PSU banks for a long period of time, they've been more on the term side than we and some other banks have been on the working capital side. That's where we sort of score much more than them.

And my last question on fee growths being a little lower, I appreciate that the base effect was there, but if you can just talk about which Parts of the core fee income was muted or at least on a percentage via growth basis.

Yeah, there were four key elements in the piece. Number one is on the payment side of the business, which is the cards. We have been, ever since demonetization, we've been seeing, and it has surprised us as well in terms of the growth rates in the debit and credit card spend. So obviously that has now sort of seen a bit of a more moderated growth from the highs of 30 plus percentage growth. So while it's still very healthy, it's still moderated and there's a base effect claim there. The second one which has had a bit of a knock is on the mutual funds distribution. From first of October, as you know, the regulations kicked in when we did not get the upfront fee. So we have seen a bit of a sharp decline in our mutual fund distribution fees since October of last year, and that'll continue for the next six months, so you will have this continuing for the next six months and the next couple of quarters as well. Having said that, we also got another regulatory hit, which was in June 2018, where the trade fees itself was declined by about 15 basis points. So these two were one of the bigger changes Having said that, even on the retail assets, we saw, as I mentioned at the beginning of the call, we had a fair amount of healthy growth rates, both in unsecured and some of the other asset products, for the last couple of years. So that incremental disbursal, where you get processing fee, petered down during this particular quarter. So I think, all put together, there is, some amount of base effect playing here. But I guess after some time, all things remain the same. We should sort of catch up to around the 15, 16% level.

Thanks a lot, Sajeev.

Thank you. The next question is from the line of Prakhar Agarwal from Edelweiss. Please go ahead.

Yeah, Kunal over here. So, in terms of this entire unsecured book, so PL plus credit card, which today stands at around about 17 odd percent. So, if you have to look at it in terms of the credit card tuitioning which is being done against this portfolio, if you can share some numbers out there and given the rising proportion, how should we see the steady state credit cards now going forward?

You mean, say, the credit cops?

No, but, you know.

I know what he's talking about. We don't sort of really give the product-wise charge in the public domain, but you can see for yourself that we used to be hitting about 90 basis points of charge the last couple of quarters. It's come down to 70 basis points. I think that itself is a reflection of the fact that some amount of moderation is happening, thanks to the fact that Agri has come off during this quarter and wholesale has also sort of been pretty much reasonably relative to the past, a bit benign. But on the retail front, I wouldn't say it is benign, it is probably stable. We have neither seen deterioration nor have we seen any improvement in that. So we are watching, and one of the reasons which I did mention is that as a part of the architecture, whenever you see strong growth rates, the architecture itself sort of pulls back some of the growth rates just to wait and watch how the portfolio behaves.

Yeah, so maybe towards that, so whatever contingency provisioning is there, maybe I think that's largely towards Agri and the other portfolio. But are there any lead indicators wherein we think that we should start making slightly higher provisioning on this portfolio as well, given the growth which has been there in the industry and maybe in the long cycle?

So, Kunal, wherever it is required, we have already factored that in. But otherwise, largely, contingent provision is primarily on account of the Agri portfolio. But otherwise, I think now with whatever provisions that are already baked into the financials, we seem to be pretty much comfortable in terms of the outlook as well.

Okay. And in terms of the return ratios, so when we look at it overall in terms of the portfolio, this would be almost like 17 odd percent. But if you have to look at it in terms of the overall profitability, the contribution of this unsecured book, and if you look at the ROAs, would it be very much in line with the industry? Okay.

No, I have not sort of benchmarked my return on access from a product perspective with others. I don't think it's available in the domains. Probably people like y'all, if you do have any research on that, maybe we can benchmark. But even otherwise also, even if you were to benchmark some NBFCs, the segmentation might be completely different than what we cater to. So it may not be exactly apples to apples comparison. So as of now, we have our own benchmark in terms of what should be the pricing, what is the expected loss in a particular product, and that's sort of honed over years of observation and modeling. And that's exactly how we have operated over the last 20 years. So anyway, I would like my colleague Jimmy also to comment on this particular aspect.

Hi, good evening everyone. On the subject of retail asset loans, whether secured or unsecured, we do monitor what happens in the industry. We are conscious about what the rest of the industry does juxtaposed to us. What I would point out over here is when you assess a product merely by its name or its segment, the actual pricing which you are just thinking about right now depends upon the PD that is bought as a function of that portfolio and a function of the various policies that exist for that product. So it's not necessarily an apples to apples comparison but to answer you we are conscious, we do look at what other people do, we are rather cautious about everything but unfortunately Product-wise, we don't put these numbers out in the public domain.

Okay, yeah, thanks a lot.

Thank you. The next question is from the line of Sai Kiran from Hightong Securities. Please go ahead.

Hi. Quickly, on the savings bank deposit, the growth momentum has come down significantly. How would you like to comment on this? Is it a one-off kind of an event or do you expect this to trend backwards again getting into your 520?

So, Sai, what we are observing is the gross momentum of customer acquisition and the change in relationship that is happening on our savings portfolio continues to be very strong. But we are also, because we are also, as someone mentioned in the call, our retail rates are still much, much higher on the term deposit side, higher than what some of the other banks are offering. So we are seeing some amount of people dipping into the savings accounts and moving into time deposits, which we are okay with, because as long as we are able to, at the margin, manage our both durations and the spreads, we should be all right. Because one of the key objectives of the Asset Library Committee is to ensure maintain healthy liquidity, and that is of prime importance for us CASA is just a tool or means. It's not necessarily the end all. As long as we are able to maintain margins, I think we are all right with that.

Got it. Just a couple of data keeping questions. One, on the upgrades and decrivories, can you just give it for this quarter as well as the full year of 2019?

Yeah, sure. So upgrades for the quarter is about 1,000 odd crores. Write-off is roughly about 1,100 crores. Recovery is roughly about 1,200 crores. This is for the quarter.

Okay. For the full year, by any chance, if you have it handy?

Full year, you want only the upgrades.

The same way, upgrades, write-offs.

About 3,250 crores is a full year. Okay. Upgrades. Write-offs is about 4,600 crores, and recoveries is about 4,000 odd crores. Sorry, 3,900 odd crores. My apologies.

Great. Thanks a lot. Thank you.

Thank you. The next question is from the line of Rakesh Kumar from Alara Capital. Please go ahead.

Hello. Yes, Mr. Rakesh. Hi, Rakesh. Yeah, hi, sir. Can you hear me? Yeah, Rakesh.

Your audio is breaking, sir. We are not able to hear you clearly.

Is there a reduction in the cost of term deposit this quarter on Q&Q basis? No. OK. And second thing is that so considering the LCR requirement at 100% and we have at 118% now. So this like city ratio, this will be the optimal number what we have for this quarter.

We're talking about the CD ratio or the LCRs?

Considering that we have to maintain the LCR now at this level, close to this level, so would we continue with, this is the optimal number of CD ratio?

No, no. I mean, my point is this is definitely one of the the lower numbers that we've seen in the recent past, but actually we are endeavoring to ensure that we try and self-harm most of the incremental growth going forward. It's not an easy task, but that's gonna be our objective. So I guess we should be seeing a bit of moderation, not too big. At the same time, I think as a company, we have been trying to diversify our funding sources. We have been resorting to, in fact, even at a slightly lesser cost in terms of institutional funding, which is far more stable, long-term, etc. We'll continue to do so in terms of the coming year, in terms of raising some bonds, raising some foreign currency bonds as well. So from a CD ratio, yes, it may be slightly elevated, but I think when you look at it as a company, net of the institutional long-term funding and capital, I think we are pretty much around the 72, 73%. Okay, thanks.

Thank you. The next question is from the line of Rohan Mandora from Equirus Securities. Please go ahead.

Hello. Sir, thanks for the opportunity. This is with respect to the HDB financials. Specifically, share how the NIM project during the quarter and also they have a tier one ratio of 12.8%. So any plans of influencing, raising new capital in that in the next year?

I don't have ready-made, but for sure the NIMS have sort of fallen from the peak. It's gone up. No, it came down in the third quarter and then it has moved up in the fourth quarter, which is, and so on a full year basis, marginally down from fiscal year 2018. Okay. And on the capital fee? On the capital, obviously, he is pretty much comfortable on the total capital ratio. He is also doing a lot of, you know, other ways and means of raising liquidity. I think he's pretty much comfortable even from a borrowing perspective or even doing some amount of asset sales very judiciously. If the markets are... are pretty much buoyant and maybe I think he will have some amount of plans of raising equity, but I wouldn't say with certainty, but maybe in the next 12 to 18 months time.

Okay. And like the growth longer was around 24% for the year. So is it primarily due to the event that happened in September or is there any other thing that is driving, that is leading to a cautious growth trajectory there?

Hi, this is Jimmy again. I presume you are referring to the loans in HDB? Yeah. So, there have been growth in loans across products. They have been not so swift in the property loans and the LAP segments, but all other products have witnessed good growth rates. There was, of course, as with the entire MBFC sector, cost of funds during Q3 did go up, but it wasn't really a question of availability. When you speak of the liquidity, the ALM is rather well matched and liquidity is very comfortable.

OK. And then lastly, with respect to the car loans portfolio for HDFC Bank, it has decreased sequentially outstanding amount so just wanted to understand it is just because of the market conditions wherein the sales were slightly lower or and how do we see the predicted for the next year is it that the target segment which we cater to in the car loan there the growth is likely to remain subdued in the next year or is there something else to read into

So, sorry, Rohan, I think the initial part of the conversation we couldn't hear clearly. Are you talking about the bank's bar loans and your outlook for next year? Is that what your question was?

Yes.

Right. As I mentioned to you, the reason for the slowdown is primarily on account of the shift to the behavior or the structural shift that we're seeing where the millennials are preferring to hail a cab or do pool sharing, which is one of the strong reasons why this has, we are seeing a lesser demand on the auto products. Having said that, the cost has also gone pretty much, we have seen steep rise, especially when nowadays you have to have three-year insurance. Mandatory insurance also embedded in the cost price. So I think that's gone up almost about 12 to 20%. So people are feeling the pinch, and that's one of the reasons why we didn't give it a slowdown. But having said that, as a company, I think we are, we believe that we can leverage on our distribution, both at the brand side and multiple other distributions that we have laid out, i.e. the virtual relationship management program, and some other new channels that we have set up which will start to fire going forward. I think notwithstanding the underlying momentum, we should sort of still outpace the growth of the market going forward as well.

Sure. Thanks a lot, sir.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit a question to one per participant. You may join the question queue for any follow-ups. Thank you. The next question is from the line of Pranav Gupta from Birla Sun Life. Please go ahead.

Hello. Yeah, Pranav.

Yeah, hi, good evening, sir. I have just one question. So the bank is looking to raise about 50,000 crores through the long-term infra and housing bonds. Is this largely to do with how we fund the home loan book or is this just beefing up liquidity for the coming year? I just want to understand what the rationale is.

This is just an enabling provision because since we have to go to the shareholders as per the Companies Act, we said let's go in with a slightly generous amount so that we don't have to, in the case that we do have a bit of a bonus in getting these kind of issuances done, then we don't need to visit to or get shareholders approval multiple times. Having said that, as I said, our requirements and our funding will match our demand for credit products. I think, which I mentioned just about a few minutes ago, we will resort to multiple such forms of raising funding. It could be in the form of infra bonds, it could be in the form of masala, not masala bonds, you know, foreign currency bonds swapped into rupees because the forward rates have sort of come down. We would also be raising institutional funding as well because post our results, the appetite for some of the institutions on us would have gone up as well. But having said that, our core key focus area is on the core deposits. And if you walk into any of our branches, each one of them will be focusing on the granular deposits. That is what our key focus would be.

All right, okay. Thank you so much.

Thank you. The next question is from the line of Brijesh Mehta from Investec. Please go ahead.

Hello. I have a question on the consumer durable loans side. Can you share me the market share you have from the feedback you get from the manufacturers of this year?

Frankly, I have not had any feedback and we have not sort of got any market share data as yet. As I said, you know, it's still about very nascent. We do a lot more on the credit card side and the debit card side where at the margin it's virtually incremental cost is very zero and But on the in-store, we still are setting up our systems and processes, et cetera. We haven't still fired in full gusto as yet. I guess it will be too premature for me to even talk about market share. Give us a bit of a time before we can start commenting on and measuring and commenting on that.

Okay. Can you share with me what is the proportion of corporate loan linked to external benchmarks?

Well, when you say external, it's not so much. It's roughly around the 5 to 6%.

Okay. What would be the implication of the lower savings account growth on third-party insurance products like Tata AIA or Birla in that sense?

No, I don't understand that.

What is the implication of... What would be the implication of lower savings account growth on third-party products like insurance?

What is the linkage and equalization?

there's no what link why would there be a link between the connection can you explain the connection sorry uh like uh like with the lower uh current account would would there be any uh impact on the third-party products like insurance in terms of sales or anything lower customers like uh there would be lower number of customers so third-party product sales should also have some impact i think mixing the balances which have been in and

the number of accounts or the number of customer acquisition. The acquisition continues to be healthy and strong. If you look at the total deposits, right? If you're looking at a comparative, then you should look at total deposits and not necessarily just savings. Because I think we explained as well that some amount of the time deposit also comes out of the savings account. But the customer acquisition, which is what is important from a distribution perspective, continues to be very healthy.

Okay. One last question, in terms of distribution with consumer durable loans, you are targeting all credit card customers which is your bank and other banks and the debit card customers of HDFC, is that correct?

We cannot target other banks' debit card or credit card customers because obviously when they swipe, it is something which goes to those banks' standpoints. Just give me a minute.

There are various products. where we assess and look at the consumer durable loans. The endeavour of course is due to the nature of the product and the requirement to sanction fast that the maximum possible amount over here does go through a straight through process, does take place through a pre-approved loan or an extremely expeditious surrogate is used which is reliable. We are currently building a lot of models. Therefore, we look at many of the new ventures selectively and surely and not in a quantum that would be impactful should there be any mistake. But there are various measures that we use by way of surrogate as well as assessment even beyond our internal customer base.

Okay. One more question in terms of the what do USB do you offer like 20 other 20 customer who already has an existing card from a bigger another bigger provider in the market in consumer durables?

Specifics we would need to revert to USB of the lake.

What is the additional benefit? Why would he come to HDFC?

Why would a customer take the loan from HDFC?

I think it's called better manufacturing diets or something like that.

So the two drivers of this product in store are typically cost and speed. So as I mentioned earlier, the way you can design surrogates that have an analytical verifiability, it helps you on the speed. And of course, the cost is a function of people's relative cost of funds.

I have seen that some of the stores do have a stronger cashback compared to any other provider. It is because of better manufacturing types or what? Is it kind of an acquisition strategy with respect to giving better cashback?

These would be case to case and in-store, online, a lot varies. I wouldn't really be able to, I'm so sorry, I wouldn't be able to detail this one out.

I think we'll need to move to the next question because there are a lot of people in the queue still.

Okay, I'm done. Thank you. Thank you. The next question is from the line of Chintan Shah from Alara Capital. Please go ahead.

Hello.

Hello. Yes, sir. Just two data keeping questions. One, should you help me with the interest expenses on deposits for FY19 overall? And secondly, breakup of provisions for FY19.

Hello? Hold on please, just a moment.

Hello? You have to wait for some time, just pulling up the total interest expense.

The total interest expense for the year is 50,728 crores, and the total provisions for the year ended March 19 is?

is 7,550 crores.

This includes specific floating contingent and other provisions, general provisions and other provisions.

The breakup is handy if you could provide that, that 7,550 crores breakup.

What breakup do you want?

Sir, the provisions break up, which you mentioned, 7,550 crores of total provisions. It'd be break up as possible if that is handy.

We don't have the annual one ready because we're doing the quarter thing, but it'll be there in every press release. If you look at the four presidents, you should be able to get that because we break up the provisions in press release.

Okay, okay, sir. Thank you. Thanks a lot. Thank you. Thank you.

The next question is from the line of Kisla Apathiai. from our back as asset manager. Please go ahead.

Hello, sir. Thank you for the opportunity. First question on what is the strategy and outlook on exposure to NBFC in terms of growth segment and any co-lending practices, any co-lending initiatives that you're looking? And secondly, what is our strategy and outlook on microfinance, including direct and portfolio buyouts?

Hi. The NBFC, we have no significant change in our strategy. Our strategy was always cautious. Our approach was always cautious, even before last year's events. We continue to have a cautious approach. We look at the financials naturally. We look at our own internal ratings overlaid on the external ratings. And we also look into the business models and business practices of the NBFCs. So there is no change in our strategy. We continue to be cautious and we continue to do business as well. So that's where the NBFC situation is placed. On microfinance, again, very little change in our strategies. I think we are now seeing the reversal of the adverse effects of the demo and those scenarios which took a toll on SLI delinquency. That is remediating to a fair extent. So once again we have our policies, our practices. We typically do not deviate and make exceptions in this sphere. There is very large and close monitoring overlaid on this. Buyouts are a case to case and portfolio specific issues so can't comment we certainly would buy portfolios if we find them to be suitable within the cuts that we provide within the parameters that we provide and of course then there is a commercial negotiation behind it uh okay uh in any co-lending uh initiative with nbfc that's in pipeline you would like to mention

And any update on deposit generation from MFI customers? Is there a trend that started seeing visibility?

So coal ending, there is nothing in the pipeline just now, but that doesn't mean we are averse to transacting with selected parties. But at the moment, there is no major significant transaction on the pipeline. The deposit buildup for, you said, MFI and SLI customers. So the advances are small and the deposits are small. They will not really move the needle for the bank. A lot of our SLI and microfinance business is, I think, part of our initiative to be all over India to have financial inclusion and to be more holistic in our approach. It wouldn't, the savings, of course, we would try to welcome and encourage them, but it wouldn't really move the need.

Thank you. Ladies and gentlemen, due to time constraints, that would be the last question. I now hand the conference over to Mr. Srinivasan Vedanathan for closing comments. Thank you and over to you, sir.

Thank you very much for dialing in. If you need anything more and we can be helpful, we will. Please reach out to our investor relations.

Thank you. Thank you very much. Ladies and gentlemen, on behalf of HDFC Bank Limited, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.