HDFC Bank Limited Q1 FY23 Earnings Conference Call Insights

Key highlights from HDFC Bank Limited (HDFCBANK) Q1 FY23 Earnings Concall

Q&A Highlights:

• Mahrukh Adajania of Edelweiss asked about CRB growth outlook. Srinivasan Vaidyanathan CFO replied that CRB loans had a robust growth of 28-29% YonY in 1Q23 and continues to have aggressive plans across segments in CRB. HDFCBANK added that growth is related to geographic and agri expansion.

• Mahrukh Adajania from Edelweiss asked about merger dispensation and any clarity on HDFC Life stake. Srinivasan Vaidyanathan CFO answered that there is no objection from RBI. When the merger happens the banking regulations shall apply across all portfolios and businesses. Some entities will also merge and the licenses of those entities will have to be surrendered and intimated to RBI.

• Mahrukh Adajania with Edelweiss also asked about EBLR repricing and timeframe of reset for retail and corporate loans. Srinivasan Vaidyanathan CFO replied that it will be 3 or 6 months; mostly three months.

• Hardik Shah of Goldman Sachs asked about the bank’s thoughts on sustainability of retail growth given the inflation concerns. Srinivasan Vaidyanathan CFO clarified that retail growth has been good for past couple of quarters. The bank is seeing good demand across products. However spend translating to loans still to a large extent will take some more time.

• Hardik Shah of Goldman Sachs enquired about the sustainable revolve rate going forward.  Srinivasan Vaidyanathan CFO said that as the economy starts to pick up and people spend, people will get back to normal pre-COVID levels.

• Hardik Shah of Goldman Sachs asked about the deposit rates going forward and how much hike the bank will be taking. Srinivasan Vaidyanathan CFO answered that the bank wants to be competitively priced and not be price leaders in the market.

• Adarsh of CLSA asked about the path towards cost income over the next couple of years. Srinivasan Vaidyanathan CFO said that pre-COVID cost to income was 39.6. Over a period of 1-2 years, the company can touch 40%, but over a medium term, 3-5 years, it will get to the mid-30s.

• Abhishek Murarka with HSBC asked about the repo hike that happened in May-June, when does it fully translate into yields. Srinivasan Vaidyanathan CFO clarified that repricing started in May and it’s a 3 to 6 months cycle.

• Abhishek Murarka with HSBC also enquired about the EBLR repo, non-repo and the fixed and floating breakup for the loan book. Srinivasan Vaidyanathan CFO answered that about 45% of the book is fixed and 55% is floating rate. 27-28% of the total book is repo and 13-14% of total bank book is T-bill.

• Abhishek Murarka with HSBC asked about the hiring target for rest of the year and tech spend in 1Q23 as a percentage of overall opex. Srinivasan Vaidyanathan CFO said that hiring depends on productivity and people addition the bank does as necessary. The tech spend is 8-9% or so and that’s stable over a longer period of time.