HDFC Bank MD says HDFC Securities will consider HDB Financial Services IPO after merger with HDFC

HDFC Bank will look at the public listing of its brokerage and non-bank finance company subsidiaries only if it is merged with parent HDFC Ltd, a top official said on Saturday.

Responding to shareholders’ queries at the 28th Annual General Meeting of the largest private sector lender, its chief executive and managing director Shashidhar Jagadeesan said the initial public offering (IPO) plan for HDFC Securities and HDB Financial Services on the merger process. depends.

HDFC Bank and HDFC announced a USD 40 billion merger in April, which was touted as the largest such transaction in corporate history, saying it would take up to 18 months to conclude.

“IPO schemes (of HDFC Securities and HDB Financial Services) are something that we will consider after (merger) absorption? We have got instructions from the regulator, when we do absorption as in merger. Will think about it, Jagadeesan said.

Earlier, he said that on HDB Financial Services, the bank is still waiting for the regulator’s directions so that a? Can the glide path be traced? As for the way forward for the company, which reported a massive Rs 441.3 crore in net after tax for the June quarter.

In case of HDFC Securities, the bank would like to retain majority stake in view of complementarity in business offerings with the brokerage, whose clients are similar to the bank, the CEO said.

Jagadeesan said whether to keep the stake at the current 95 per cent or reduce it, a decision will be taken on this when the time comes.

Jagadeesan said that despite approval from RBI, the bank has postponed its plan to invest more in HDFC Ergo General Insurance, pending its merger with HDFC, after which the insurer will become a subsidiary of the bank.

Once merged, the bank will also have to look at raising the maturity profile of its liabilities, which are currently less than three years, Jagadishan said, explaining that mortgaged assets are usually long-term in nature. Due to which the Asset Liability Committee of the Bank will have to take appropriate call.

He said the overall composition of the merged entity’s housing loans would be 35 per cent and a single product as well, indicating that it does not see it as a concentration risk. He underlined that while under-penetration presents an opportunity, on the other hand the bank’s other loan products are also on the rise.

He said the bank is keen to give protection to HDFC’s deposit agents post-merger, but will wait for regulatory clarity on this.

The bank, which faced a slap from the regulator in the recent past due to outages faced by customers, is soon planning to launch a payments app that will be better than its current offering called PayZap and will include cashback, Jagadeesan. facilities including instant credit of Rs. Told.

From July or August, it plans to launch a new digital offering every three to four weeks, which will also include a new mobile app for corporate and small business customers, he said, adding that it is already One has soft-launched the Customer Experience Center. without much fanfare.

The CEO said that on the credit card front, the bank has made great strides since allowing new cards to be sold after the ban.

The total number of cards stands at 17-18 million and HDFC Bank’s market share in total receipts has gone up to 47-48 per cent, he added, adding that from a profitability point of view, it will return to pre-COVID levels . In the next 6-8 months.

The bank is also familiar with data privacy issues and has recently appointed a chief data officer, who will work alongside a chief data protection officer, Jagadeesan said, adding that its entire data mining operation begins with the first customer’s consent. And it will comply with Indian rules whenever they come on this front.

With a view to reduce downtime, the bank will invest more on the technology front going forward, he said, without giving details on the quantum of funds to be invested.

Jagadeesan said that in the last two years, the bank has seen an increase in corporate loans in the overall loan book, leading to a 4 per cent decline in the net interest margin. Increase in the share of retail advances to 4.2 per cent.

There has been more credit loss on the retail credit front during the last two years of the pandemic, he said, adding that similar trends were observed in FY09 after the global financial crisis and after demonetisation as individuals faced difficulties in their financial situations. was faced.

With bank exodus rising to 19 per cent as the economy reopens after the pandemic-induced slowdown, Jagadeesan said, the number is “shameful”: the youth is high and efforts will be made to reduce it.

The bank has the nod to open a branch in Singapore and after the merger with HDFC, the number of overseas branches may increase, he asserted, adding that it sees India as a significant opportunity and not a significant increase in its global footprint. sees. , which currently has branches in Bahrain, Hong Kong, Dubai and GIFT City.

Meanwhile, the bank’s non-executive chairman Atanu Chakraborty said that it is looking at doubling its branch network to over 12,000 in the next 3-5 years, and the size of the branches may reduce over time.

He said usually in a metro city it takes two years for a branch to break even, while it is around three years for other pockets.

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