HDFC Bank Limited Q2 FY23 Earnings Conference Call Insights

Key highlights from HDFC Bank Limited (HDFCBANK) Q2 FY23 Earnings Concall

Management Update:

• [00:02:06] HDFC added 121 branches in 2Q23 on the distribution expansion an d about 500 more branches are in different stages of the pipeline to be opened in the next few months.

Q&A Highlights:

• [00:17:53] Mahrukh Adajania enquired about the liability growth going forward. Srinivasan Vaidyanathan CFO answered that the funding strategy continues as it’s an important focus area of execution.

• [00:23:02] Suresh Ganapathy with Macquarie asked about RBI increasing rates by 190 bp, while HDFC not increasing it even by half of it. Srinivasan Vaidyanathan CFO clarified that for HDFC it’s not a rate driven kind of marketing process, it’s more a relationship based. The bank added that there is no formula of repo pricing that determines the deposit rate. It’s about demand and positioning in the market.

• [00:23:51] Suresh Ganapathy from Macquarie asked about branch additions. Srinivasan Vaidyanathan CFO answered that the bank has been slow in 1H23 on that front. In 2H23, HDFC expects to accelerate the process of branch opening.

• [00:30:00] Kunal Shah Of ICICI Securities enquired about reason for payment products growth lagging both QonQ and YonY. Srinivasan Vaidyanathan CFO replied that good amount of traction is coming on the spend. The revolver rates have not picked up and are still at the 70-75% of pre-COVID levels. However added that 1-3 month revolver type of profile customers are slightly picking up.

• [00:32:04] Kunal Shah Of ICICI Securities enquired about commercial banking outlook considering the rapid growth. Srinivasan Vaidyanathan CFO said the strength is quite robust with lending being one of the value propositions.

• [00:34:49] Rahul Jain from Goldman Sachs enquired about headcount growth outlook. Srinivasan Vaidyanathan CFO said that some amount of hiring has happened for the branches and will happen for more new branches. The additions will be based on branch additions, and for higher relationship management additions.

• [00:48:15] Prashant Kumar with Sunidhi Securities asked about impact on credit card business due to linkage of RuPay credit card on UPI. Srinivasan Vaidyanathan CFO answered that it’s early stages on that front. On the pricing of UPI and how it settles down needs to be seen going forward. Currently the transaction size through Marstercard and Visa is quite high and good for the bank.

• [00:50:14] Prashant Kumar of Sunidhi Securities also enquired about the slippages, writeoff, upgrade and recovery. Srinivasan Vaidyanathan CFO said the slippages in 2Q23 was about 36 bp or INR5,700 crores; recoveries and upgrades both 19 bp or INR2,500 crores; and writeoffs about 22 bp or INR3,000 crores.

• [00:51:04] Saurav with Vice President from JPMorgan asked about the drivers of 9% QonQ growth in corporate banking fees. Srinivasan Vaidyanathan CFO said that banks all businesses are based on returns it provides. And added that these are good relationship based business and add good traction.