HDFC Bank Limited

Ladies and gentlemen, good evening and welcome to HDFC Bank Limited Q4 FY24 earnings conference call on the financial results presented by the management of HDFC Bank. 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, Chief Financial Officer, HDFC Bank. Thank you and out to you, sir.

Thank you very much. Good evening and a warm welcome to all the participants. You see some earnings presentation deck posted. Kindly download them as appropriate or you could refer it online. and use that. We have Sashi Jagdishon, our CEO and MD with us today. He will have an opening remarks and soon after that we'd get to the Q&A and take you on from there in terms of any other clarifications or questions that you have. With that, welcome Sashi and please take it over.

Thank you Srini and thank you all for joining this call. Yes, it's quite a while since I joined an earnings call, so I may be a bit rusty, but do pardon me for that. Ever since the famous or some of you may call it infamous Q3 earnings call results, we have received a lot of feedback from several of you. With all humility, we have incorporated most of the feedback, so we are grateful for that. Thank you for that. I may have mentioned in the past, maybe in the last investor conference that I came on, it's important to reiterate that this is a completely new organization. The merger with a non-bank financial entity, the EHTFC Limited, and the bank has landed a certain set of day one financials, and so there is a new starting point across all Metrisys. This is a new organization, so it'll be, we have to, not only you, but even us, we have to desist from having any comparisons vis-a-vis the standalone financials either the bank or even the erstwhile HDFC Limited. We are now nine months into the merger. The core metrics have remained stable since the time we merged with HDFC Limited. What does this demonstrate? This demonstrates that the underlying resiliency and the energy of the standalone franchise of the bank is very stable. And this is something that all of us have witnessed over the last 30 years. So this should be a bit of a positive for all of us, whether inside or externally, that the resiliency of the institution continues despite very adverse macro conditions. What's the focus that we are now focusing internally? The key focus over the medium to long term The medium as I define it between two and three years is to focus on improving our profitability metrics defined as the ROAs and the earnings per share. To achieve that, what is key is to ensure the most important focus is the sustainability of our deposit franchise, especially the retail deposit franchise. And that's going to be achieved not because of any shortcuts that we can take. Yes, there is a price environment, there's market intensity, there's a competitive environment that is there. That's a reality. But how do we ensure that we are on par with some of the key players in the market and we don't try and overprice ourselves or don't bid for some of these deposits is the strength of the franchise. We have done that. probably as we go along and that will be reflected in the some of the financial metrics of the organization the key to this sustainable momentum is our enhanced customer engagements and elevated service first culture we're not saying that you know after 30 years obviously there's a reason why we have reached this kind of excellence in this deposit mobilization franchise. But we've realized that if you have to be even better, the only way is to elevate the customer service first culture, and we have a lot of measurement and monitoring mechanism in place internally for that. So the intensity of the same is going to be heightened And that's what we are driving, and that's somewhere reflected even in this tighter environment that we have seen. We will continue to invest in distribution in people and technology. In fact, our operating leverage will be harnessed over a period of time using enhanced tech and digital infrastructures it's not something new but we have also we've always emphasized not just now but for a long period of time that we are not a quantity player whether for liabilities or whether for assets as well our focus is on quality which is a balance between risk and margins In several cases, in several points of time, we have demonstrated that whenever there is any adverse or early indicators on the risk side, we tend to grow slow. Or if there is heightened competition or irrational competition both on the liabilities and assets side, we are happy to give up that kind of a share. So we're happy to grow slow. These kind of gyrations will be there not just now, but even in the future. And so these are the kind of adjustments that we tend to do. But we have seen in the past that hardball price-based strategy is not a sustainable strategy. This will also pass. And I guess over a period of time, people who continue to stay and not vacate the place will survive and will thrive as well. I know a lot of you are very eager to get some guidance and outlook on some of the metrics, and I don't blame you all for that, and it is something that probably is necessary for your model building. But unfortunately, we have realized that it's not just now, but even in the past, that providing guidance is something, a kind of a distraction to towards our long-term objectives. We would like to stay focused, so we shall, I know you will try and ask for a lot of outlooks and guidances in various ways during the course of this call, I'm sure, but we will be steadfast in trying to ensure that we don't give them. I know you will scream saying that, you know, we are continuing to carry on truisms and not sort of not giving any tangible outlook, but I can assure you that we will have an anchor in terms of the profitability metrics, which is the long-term, medium to long-term view, which I can say is, which is already there in the deck, which is pretty healthy, but with a bias on an increasing trajectory. The Quarter four results is a manifestation of the hard work of the entire workforce of HDFC Bank and ably led by the leadership team. You know, it's a great opportunity for me to thank each one of my staff, which all my ground force for rallying around despite the challenging maximum competitive environment. If you've seen the deck, I would like to just summarize that we continue to gain market share in deposits despite, and I think it will be visible that we have kept the cost of deposits rather range bound. Our active growth has adjusted to recoup the liquidity buffer. So if you've seen for the full year, the incremental credit deposit ratio or loan deposit ratio is more or less similar to what we have always done. In fact, the advances mix is more or less towards better yielding segments like retail and CRB. We did have one-off gains during the quarter, but we have nullified the impact with an equivalent one-off provisions. Our asset quality continues to be very pristine. All our portfolios across segments, including early indicators, continue to be benign. We have, as a part of prudent risk management, created a counter-cyclical provision, which is a provision in good times. And this is something that we have done in the past, and this is one of our philosophies right through. there is a certain rationale for creating these provisions, which we will sort of call out during the Q&A. We believe that such provisions really enhances the resilience of the balance sheet. I think even after adjusting all these one-offs and nullifying the same, the core return on asset is in the range that we've operated in the past. and that should be a great indicator for the future as well. So I think we will pause, I'll pause, and the three of us are here to take more questions from any one of you. Thank you.