HDFC Bank Limited

Q1 FY26 earnings conference call. As a reminder, all participant lines will be in the lesson only mode and there will be no opportunity for you to ask questions after the brief commentary by the management. She will need assistance during this conference call. Please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. And now at the conference, O. M. Srinivasan Vaidyanathan, Chief Financial Officer, HDFC Bank. Thank you and over to Mr. Vaidyanathan.

Thank you. Thank you, Neera. Good evening and welcome to all the participants today. We have Sachin Genish, our CEO and MD with us this evening. We'll hand it off to him for opening remarks, then we'll get back to you. Sachin, over to you for opening remarks, please.

Thank you, Srini, and thank you all on the call to join us on a Saturday evening. Let me just start off with a little bit of what we see on the macro. You all know this much better, but let me summarize. The global situation remains pretty volatile with a weakening growth outlook amid terrorist-related and geopolitical uncertainties. Within this context, India remains a relatively better place, supported by a stable macro environment. For this fiscal, we expect GDP growth to sustain, supported by pickup and improved performance of domestic factors. Normal monsoons, income tax cuts that you saw in the last budget, benign food inflation as you have been recently seeing the prints on inflation, all go very well for domestic demand, especially during the festive season. Concerned policy and impetus, which we have been seeing right from January, February of this year till until recently, support sustainable growth. Coming to our performance, let me just recap as to how we traversed this over the last 12-18 months. Last year, we have grown our average deposits at a healthy pace of 16% year-on-year. and continue to gain market share as we have done in the past. However, we slowed down our average advances or AUM assets under management growth to about 7% last year in alignment with our strategic objectives to bring down the CD credit deposit ratio from 110% at the time of merger to about 95% as we speak today. This rate of growth on the aquifer management has improved to 8% in the quarter just ended, which is the June quarter of FY26. Our growth engines are well geared to grow, and as we move forward, we expect our loan growth to continue to improve from here and remain confident of growing our advances as the system rotates in FY26 and higher than the system in FY27. The growth enablers, apart from balance sheet growth, remain customer-centricity, technology, and our people. Some of these aspects, I think, during the course of this quarter and probably the next half of the year, I think we shall be talking more about it as we unveil some of the initiatives that is underway in the bank. As mentioned in the previous earnings call, both the CFO and Bhavin did mention, and you can sort of recall some of the transcripts of the last earnings call, quality rate changes impact the loan side to external benchmarks, while deposit side takes longer to factor it in. You know, as they probably would have mentioned, a large part of our asset side of the balance sheet is floating in nature. It's somewhere around the 70%. It was the library side is more or less fixed in nature. So this would be a headwind in terms of when the rate cycle is on a downward trend. This impact depends on the pace and depth of the rate cut. You have seen that in the results just announced. While we may see quarterly fluctuations in margins due to this lead-in impact, We expect to stabilize it over a period of time. Our asset quality, one of our main USPs, remains healthy, positioning us well for growth in both assets and deposits as liquidity and demand improve. During the quarter, we carried out the HDB Financial Services listing process, wherein the bank also guided us with some stakes, and which eventually culminated in the stocks being listed on 2nd of July. We thank all the investors who participated in this Fed IPO. Earlier today, the board also announced an interim dividend of Rs. 5 per share, and they also recommended to shareholders the first ever bonus share issue in the ratio of 1 is to 1. Trini and team will probably give you more details as questions come about from all of you. So until then, I would like to express my gratitude to all our employees for their hard work and performance. in a very challenging environment. As he moved from a, from a, you know, they managed the slowing down of the engine last year. Now, to get back into its momentum as we have laid out as a strategic objective, it requires a lot of courage. I think they've done extremely well and we are proud of it. And a great gratitude to our shareholders who have supported us in all our time. And to the board for their leadership support and their strategic guidance. So thank you all. On the call for your support as well. Srinu, over to you.