HDFC Bank will consider listing of units only after merger

Mumbai The bank’s managing director and chief executive officer Shashidhar Jagadeesan said HDFC Bank Ltd would consider public listing of its brokerage and non-banking financial company (NBFC) units only after the completion of the merger with parent HDFC Ltd.

This April, the country’s top private lender announced its merger with HDFC to create a financial giant. The deal is expected to take 18-24 months to complete.

“HDB Financial Services is a financial investment. With the announcement of the merger, we are still waiting for the regulator’s instructions as to what is the holding position in these companies. Will be able to decide on future plan, when we get approval from RBI for merger, their instructions on investment.”

“A major chunk of HDFC Securities’ customers are customers of the bank. The brokerage is the product offering of this group. Here we want to maintain a majority stake in this company as it complements our product offering. Whether 95% at current levels or somewhat monetized is something we will decide on going forward.”

HDB Financial Services is the NBFC branch of HDFC Bank.

Jagadeesan also said that once the merger is approved, the bank will consider increasing its long-term liabilities. The Bank’s Asset-Liability Committee (ALCO) will take an appropriate decision on raising the maturity profile of its liabilities.

“The big deposits are up to a three-year bucket. Whereas we can have 75% of corporate debt in the long-term bucket. We already have AT1 bonds, long-term capital. With the impending merger, the bank will start thinking of increasing the long-term deposits. Alco will think about it at an appropriate time.”

Separately, in an investor call, HDFC Bank said it had to let go Wholesale loans worth Rs 50,000 crore to compete after interest rate hike in May.

Despite this, the bank saw a credit growth of 21.6% compared to a year ago 1.39 trillion. In this, the retail loan book grew by 21.7%, while the corporate loan book grew by 15.7%.

Private sector lender reports 14.5% growth in net interest income (NII) from a year ago 19,481 crore. Net interest margin remained flat at 4% of total assets.

Bank reports 19% growth in standalone net profit over a year ago 9,196 crore in the quarter ended June after providing 2,984 crore towards taxation. During the same period of the previous year, the net profit was 7,729.64 crores.

As of June-end, HDFC Bank’s gross non-performing asset ratio stood at 1.28%, down from 1.47% a year ago. However, on a sequential basis, the gross NPA ratio increased from 1.17% a quarter ago. The net NPA ratio stood at 0.35% as on June 30, compared to 0.48% in the year-ago period.

Other income remained flat compared to a year ago 6,390 crore on account of the effect of loss of treasury of 1,300 crores. However, excluding trading income, other income grew 35.4% compared to a year ago, thanks to higher fee income.

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