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Ladies and gentlemen, good day and welcome to HDFC Bank Limited media conference call. As a reminder, all participants will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Srinivasan Vedanathan, Chief Financial Officer, HTFC Bank. Thank you and over to you, Mr. Vedanathon. Okay, thank you, Nirav. Good evening to all the participants. Welcome. Without much ado, we will get to have with us today, Sashi, Anup, and Kaizar. Opening remarks from you, Sasi, please, so we can get to the next stage. Sure. Thank you, Srini, and thank you all for the media fraternity. Just to summarize the financials, I think the top line has been extremely healthy. We have seen a fair amount of underlying business momentum in various matrices, especially in retail and MSME, which is moving in the right direction and pretty healthy. The margin trajectory should be upwards from the next quarter onwards. think that reversal should happen that's that's pretty significant and I guess our asset quality continues to be extremely pristine which is our USP right through and we believe that this will continue for a long time in multiple business cycles as well I think the a lot of aspects I think will start to change as we move into fi 20 uh april of our march of 27 onwards i think um with uh with that i don't want to sort of waste too much of your time i would like to take some more questions but i would love to thank each one of you for the kind of support that you've given to the institution over these 30 years and to me over the last six years when i was the help I would also like to take this opportunity to thank Kaizad for a wonderful stint in the institution. He's been a foundation pillar, and I think he deserves a lot of applause. Thank you, Kaizab. And we welcome with open arms Anup, who's also here. I think he will come in with a breath of fresh air, and we welcome him, and we wish him all the very best in his stint as a CEO of HDFC Bank. So over to you. Thank you. Thank you, Sushil, for that. Anup, a hearty welcome to you, the privilege that you are with us today, and we look forward to working with you through the times to come. A couple of minutes of any opening remarks will be great. Thank you very much. Thank you Shashi, thank you Kehzad, thank Shidi for the warm welcome and very grateful to the board of the trust based on me as MD&C of the bank. I am very proud to work with the board, chairman, leadership team, colleagues across the bank to build this very strong foundation which is a privilege and a responsibility for people with deep expectations. I want to just thank Shashi for his deep leadership because last six years of deep leadership across post-pandemic phase, then completing the landmark HGFC merger, bank merger, scaling up the branch network and strengthening the core technology capabilities. I think it takes quite a work to get it done in six years. I think Kehzad, I would say that Kehzaad has been the most differentiating fact of HGFC group and HGLC bank in particular has been a very, very strong credit quality across cycles, across regimes, because I think he started in 1995 and we know from 1995, country has gone through various phases and banks and institutions have gone through previous phases of credit cycles and I must say to the credit of Kazad and the very very you know deeply committed and very strong team that this institution has been unscathed and I think it is quite a testimony to the team here on this post merger of course you know the balance sheet changes and the transformation changes it is still underway but I would believe that lot of it is behind us we still have some work to do you know but thankful for all of them to you know and to the board to give me this opportunity and we'll work alongside the team and make sure that you know it goes from stem to stem I think we'll just open it up for thank you thank you enough we look forward to that working together on that neither please open it up for questions please thank you very much we And now we begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press the star and two. Participants are requested to use handsets while asking a question. Please note, participants are requested, to restrict to two questions per participant and kindly join the queue for a follow-up question. First question is from the line of Ritu Singh from CNBC. Please go ahead. Well, thanks for giving us a chance. And Mr. Sashitha Jagadishan, if I may start with you on this is your last quarter. You're going to be stepping down from your position in a few days from now. Any unfinished agenda and the kind of advice you'd have for the incoming CEO Anoop Bakshi. Also, if you could assure stakeholders, I mean, you just had the news that, you know, Kehzad Barucha is also seeking an early retirement end of December as the deputy managing director. You know, Sweeney, your CFO, as well as retired later this year, and then Puneet takes on. So there's a whole lot of management changes that are suddenly taking place together at HDFC Bank. So how would you assure stakeholders of stability, of continuity, of execution and that there'd be no more changes uh you know at the top level that is one secondly the margin trajectory yes we understand the dip in the quarter of course is being on account of you know some of that large fdnr raise that has come in but that said you know this is an all-time low for hdfc bank on on the margin front as well uh the you know the casa ratio remains uh you know much lower than what we've seen you know a few years ago pre-merger what's the sector taking in to improve both of those. And if Mr. Anup Bakshi could also chip in with what he sees as the key agenda, the key priorities as he takes on this role as the new CEO, the first outside CEO that the bank is going to have. Let me answer a few of that. Number one is, look, the good part is, of course, you know, Kaisar and Ashini and others have been stalwart for sure, but this institution has been driven more by processes and not by an individual personality. So I think that the second part of it is that the depth in management is so large that, you know, the continuity and the ethos of the institution will be intact as well. So Anup comes in and he will lead a team of able leaders who have been with the institution for a long time below him, and they will be the fulcrum at which the ethOS and the fact of the matter has enabled support to Anup to chart out his vision and his strategy as well. So, you know, Anup has about 34 years of experience in the field of financial services. He's a seasoned player who has been not just in banking, but also in insurance. So he has a very holistic view. And I think for him, this is going to be as easy how it was in his earlier stint as well. So I wish him the very best and you will hear more from him going forward. On the aspect of margins, yes, the impact may be slightly higher this quarter. That's because of the full impact of the previous quarters, the asset push in terms of the non-retail composition being high, both on the liabilities side and on the assets side. I think that sort of has gone through in this quarter, in addition to the small impact on account of the FCNR mobilization as well. But as we move on from here, I think with the upward rate trajectory, there should be a change because a large part of our balance sheet is linked to variable benchmarks. and therefore you will see a slightly much faster transmission on the asset side. Of course, it doesn't mean that the entire thing will pass through in one quarter because there will be the so-called asset mix change that will need to also happen over a few quarters before you can see the full impact of the rate cycle changes being transmitted on the assets side of the balance sheet. As regards CASA ratio, I think it's a combination of, A, the proportion of low-cost flows moving into the banking system, which has been steadily come down thanks to the changing household behavior. That is something that the entire system has to confront because, overall, I think the cost-hour ratio has even come down for the system as a whole as well. But to us, it's slightly more heightened because of the fact that we had to take in more time deposits, more than what we normally would have done. A is because we have a larger proportion of the balance sheet, and two is we have to substitute a fair amount of borrowings that have been maturing over the last three years with time deposits as well. So that's one of the reasons why the ratio has been falling, but this is something that we knew that this would be the kind of trajectory. But there will be an inflection point when probably Anup will probably be able to explain it now or in slightly, you know, far more greater depth after a couple of weeks or a month, where he'll come out with a kind of a strategy which may be, which may have some alternate funding sources which can then protect the retail core liabilities as well. Anup, anything you would like to? Ritu, and Ritu for everybody involved here, we see the groups across the aisle, I have always seen this group with great admiration and all of you know it. It has a very, very rich legacy, it has market leadership and it has reputation within the Indian financial system which are exceptional. So what are we going to do in the very, very near term? Very near term, I'm going to engage with all the regulators, customers, stakeholders, i'll gather insights and that will become a key input to our organizational priorities a very warm they are they are around and i'm going to take inputs from them but i must assure all of you i have yet to join here i'm gonna join here on 27th when i take over but i've been here for one or two days and i met the team i know many of the teams from earlier stints exceptional team very sound team very able team and it's a very process driven institution and it is not dependent on just one or two or three individuals it is a great institution very interlinked with each other and great ethos of serving the institution and if you look at the leadership they have spent many many years within this system and they know the system and they are fully fully committed to the system to the institution so in fact i am very very lucky i take for an institution which is solid very sound and post merger the balance sheet transformation that has changed that is that is in some sense unwinding much of it is behind us some more work needs to be done which collectively i'm sure we will do but at this point of time i'm just listening in to feedback understanding the mechanics of the balance sheet and pll which from outside you can only as you know only understand that much but very very sound institution sound practices so lucky to be here thank you mr jadnishan if you could clarify like i asked could you assure stakeholders uh one of course that you will be able to start on a clean slate some of the issues you know whether that was governance linked or court cases of you know senior exits all those are behind and with a new CEO coming in are we going to see more changes at the top you know even with mr. ambition of course reiterating the bench race from yeah so here I will come in this is a quarterly call so we'll just stick to quarterly all question thank you thank you Peter thank you very much I request all the participants can you limit yourself to two questions and rejoin for a follow-up next question is from Len of Subrata Panda from business standard please go ahead hi I mean my question again is on the top level I I mean, with Mr. Anubhagji joining and Mr. Bharucha exiting in December, we have one MD, CEO, one ED, Mr. Nimitata, and Mr Rangarath, I think, his term will end next year. So the top is pretty thin. So, I mean there will be a requirement to induct more people as executive directors. So when will that happen? And also on the results front, your FCNR mobilization was around $11 billion, whereas your competitor ICICI did much more than that. So where did we, I mean, was that the aim, $11 billion, or did you fall short on any front? If that can answer, yeah. Anup and team will obviously, as I said, the depth in management is large, but I'm sure Anup will have the wisdom to sort of decipher as to who are the potential candidates that need to be, along with the board, of course, for any future vacancies that may arise on the board. It's too premature for any one of us to comment, but I can assure you that the talent is pretty much available, but that's for the board and for Anup to decide in future. The second aspect on FCNR, I think, you know, we have just about two effective branches operating outside of the country. One was Bahrain, the other one was Singapore. I think there were other institutions which have done remarkably well and full credit to them. But I'm told that the number of branches that they could sort of use was much larger. And that sort of did play a very significant enabler in terms of mobilizing larger numbers. So I think we probably did whatever we could with the kind of resources that we had. And yes, as we move forward, I'm sure it's one strategy that the bank will have in terms of expanding its footprint in the overseas jurisdictions at some point in time. Thank you. Just to add, what was the landed cost of the S&RB deposits? The landed cost would be somewhere between the 6 and the 625. Some came in at 6. some came in that in between that there were a there was a period of time where we moved it to 625 so the average would be somewhere between weighted average would somewhere between 6 and 625 thank you so but i'll request to come back for the follow-up next question is from lana saloni shukla from economics times please go ahead Yeah. Good evening, sirs. Before I come to my question, congratulations, Shashi sir, Saini sir, and Kezad sir for your contributions. And I will miss hearing your insights on the call and best wishes to Anoop sir as well as he leads the bank. I just wanted to understand, the bank has had healthy loan growth and deposit growth, but somehow it's not translated into to profit growth, unlike we've seen your nearest peers, ICSN, Axis, who have shown much stronger profit growth. So it may not be a like-to-like comparison, but what is preventing this strong balance sheet growth from translating into earnings? And one more question on the corporate side of the book that continues to grow very strongly. So what all pipeline and levers do you have there at the moment? I'll probably start. There are two elements to the profit growth versus balance sheet growth. I think you'll see it in our earnings take on page number four. There is a comparison. Last year, same time period, we did have treasury gains which were higher than what we have realized this year. So normalized for the treasury trading gains, you see the year-on-year profit growth is 12.6%. That's one. The second aspect of that is, of course, the margin, right? So there were certain constraints and certain choices that we did over the last two quarters, and so the margin is slightly lower than where we had envisaged it would be, and it would take a couple of more quarters to claw that back. So that's part of it. These are the two things, and it's on page four that you'll be able to see it. Thank you very much. Next question is from Nayanu Hamsini Karthik from Money Control. Please go ahead. Thank you. Sashi, firstly, we immensely miss you because you've been spoiling us with your commentary, especially in the last three quarters. We'll miss hearing from you. Congratulations to Mr. Bakshi for the new role. couple of things i'd like to understand from possibly both of you um home loan business at at the time that hdfc took over from uh i mean when hdc limited acquired or was acquired was um slightly above sbi's home loan portfolio over a period of time it's been a bit of a seesaw um how do you see this sort of change uh in the next uh let's say uh two three quarters SBI seems to have sort of overtaken HDFC on that front what should we expect on the home loan business, on the mortgages business are you sort of decelerating a little on that to ensure that margins are a little more favorable to HDFC in this current scenario, that's one, and number two, my question to Sashi, Sashi if there was any little bit of advice that you gave to Bakshi in terms of preserving the culture, preserving the ethos of HTFC Bank, an institution built over 30 years. It would be nice if you could please share that with us, Sashi. Okay. Hamsini, first of all, on home loans, as I said, it's a great product and a very high on emotional quotient for any institution to buy. And with a brand of HTLC, I think this is something that is going to be the main pillar and product for customer acquisition going forward. Because along with it comes a long relationship, sticky primary relationship, which is what is going to salivate in the, as you know, over the medium to long term. But having said that, I think somewhere down the line the pricing price competition has been rather intense on this particular product it's become a quite commoditized so we have we have been happy to sort of let some of these deals which have uh go uh where of the margin doesn't make any uh sense uh therefore we are not necessarily uh we are not necessarily um you know um competing on the price front and therefore um it's all right that uh we sometimes go even below some of the larger players as well as long as we are relevant to the top one three etc but having said that As I mentioned, the kind of benefits that one is having in terms of the savings account penetration for all the disbursals that we have done since the last three years has been remarkable. Almost about 95 plus percentage of our home loan customers who we have acquired over these three years have got multiple products and surely a savings account. and the balances in the savings account build has been extremely much higher than the normal savings account that we would have done so um you know almost about uh as we speak at a portfolio level including the ones that uh we have inherited from ehdfc limited almost about 60 of them pay emi through our htfc bank accounts now so that is a pretty healthy one therefore we will stay in this space but we will be very careful about what we need to do in terms of uh being competitive or should we uh compete with some of the banks which have a very low pricing as well having said that You're right, whilst what we are looking for is the relationship and the upsell to a home loan customer, we probably, and Anup is here, Anup and his team probably will think about trying to have far more alternate strategy on selling down or securitizing some of the home loan assets, as in when we seize the right market and the right investor segment for that same book. So if that happens and if there is a strategic and a very consistent offload that is possible, then I'm sure then they will be rather intense and competing with some of the larger banks even from a pricing perspective. But as of now, since we are holding a lot on our balance sheet, we are a little bit conservative in terms of what is the threshold pricing that we would not like to go below. Thank you very much. Thank you. You're welcome. sorry yes sir oh do you need oh thank you thank you next question is from line of Siddhi from Bloomberg please go ahead what is given the fact that now mr. bhakti said that he will speak to investors and stakeholders after taking over no question is how is how are you planning to convince investors perhaps that the new new management or because of the new management then the growth won't be won't take a hit. My second question I'll come later once you answer that. Also input means input in totality so there is nothing much to comment at this point of time from my side. Okay, my second question is going to be entirely on your succession planning strategy also. Mr. Bhakthi comes from an entire institution that has created leaders. How would you perhaps look at, you know, imbibing the same culture within HDFC Bank and have a strong leadership pipeline going forward? I think we will stick to quarterly results, too early for me to comment in any case, but we should stick to the quarterly results. Thank you very much. Thank you. Next question is from Ranav Piyush Shukla, from ET Now, please go ahead. Yeah, good evening, all the gentlemen, first off, thank you, Shashi sir, Srini sir for uh your uh continued support and uh all the best for what we write and congratulations i want to i have two questions first is for kaisar sir and jashi sir uh both of you have retired you were eligible for another terms why did you choose to move on from the bank uh with regard to just just i want you to know the reasoning because there was none mentioned in the filings or anything uh why did you move on and second is my uh one one query i had on this proposed insurance guidelines on distribution uh commission being capped uh what uh impact would it have on your fee income from third-party services uh is there any feedback that the bank would like to make to the regulator idea in terms of just these two questions uh on on what the effects and the impact of the proposed discussion this insurance distribution knows okay uh why did we retire but uh you know the point is i like to now invoke what uh anup has been saying let's stick to quarterly results i think you know sometime after 31 years one needs to also start to look at life outside of the institutions that you have nurtured, you have grown with. It's a personal call that we have, I have taken, I'm sure even Kaizad has taken for that. And we have no regrets and we have enjoyed every moment of it. And I leave it with a lot of pride and satisfaction to this institution and which will rock and Anup will lead it admirably. I'm very confident about it with the Zabel team and that's the strength and resilience of the franchise that we are all leaving behind and we shall now watch along with you as investors from outside. Thank you. Thank your second part of your question was relating to the insurance changes and regulation. As you know, it is a draft calling for comments. There's a time frame set for it. We have some more time to respond across the industry, both the manufacturing side as well as from the distributor side, to provide comments. So we'll go through it, and it will come after consideration of all the inputs and the comments. It will land at some place, and at which time we can assess what it is. It is premature at this stage to think about anything. Of course, you know that the whole underlying theme for why such regulation comes is to see how broad-based insurance offering could be taken up by reduction of cost at the end consumer level, which means there should be much more volumes coming in, much higher persistency, and so on and so forth. But we'll have to see how this lands and then what kind of responses we come up with to manage that. So we will have to wait for some time for the final rules to come. Thank you. Next question is from Nainav Ashoka Mithran from Hindu Business Line. Please go ahead. Sir, sorry to interrupt. Your voice is breaking terribly. Can you come in a better reception area, please? yeah just a second am I audible now slightly better congratulations for the journey you've taken for the journey you're going on from here the question is what is the scene with palm loans this this this quarter do you see an effect of el nino on that and is there some tempering in the numbers okay so you know the agri side if you really look at it we've had we've had a below par monsoon however when we talk about the monsoons being below par it has not been you know even between the peninsula and north of india that's also been a bit of a variance out over there having said that when you really look at the sewing that has happened the sewing has been pretty resilient and we have seen that this overall sewing has not the curry sewing hasnot been altered too much it has been a tad lower than last year but not something which you know would be of materiality so we do believe therefore that the kharif crop that will come and the output that will comes through would largely be along the lines from the sowing and you know with the techniques that are being used there is an increase in the yield output so with more or less the same sowing a little step up in yield output we should see the curry crop come through well and accordingly the agri sector continue to hold just to draw your attention if you look at the composition of the quality of the agribook between the last two quarters it has been stable Thank you very much. Next question is from PTI. Please go ahead. Thank you so much, sir. Thank you for all your commentary and and caddiness over the last few quarters. This is actually to Anup sir. Anup Sir, as you take on this mantle, we are grappling with an environment which is difficult to operate in that both like domestically there being the El Nino factor and monsoons and externally also we know about the entire geopolitics. So, when you were taking on this offer, what were you more wary about? Was it the internal issues within the bank or was it these externalities, so to say, which hampered the business environment immediately? So, I will just again repeat my previous response, which is to stick to quarterly results. Sir, sorry to interrupt you. May I request you to speak a little closer? Yeah, I will repeat my earlier response, which is to stick to quarterly results. Okay, sir. Thank you so much. And also, sir, when it comes, just to double-click on your initial remarks, what would be the immediate agenda after you are done with speaking to all the stakeholders? Are there any business targets? You have seen the bank closely, I'm sure, from the outside as well. What would be their immediate target? No, the immediate target will be once I, you know, listen to everybody, then we'll drop the agenda. That is the immediate target. Sorry to interrupt you, Ashish. I'll request to come back for a follow-up question. Thank you. Next question is from Laino Shipra, Paidkar from Financial Express. Please go ahead. Hello, sir. Good evening. Am I audible? Yes, go ahead So my question is that as we are nearing the ETL implementation date, any assessment that the bank has made on how much would the impact be? The ETL Implementation date is certain, at least as of now, it's from 1st April to D7. From our assessment of a preliminary assessment of what we have done, we feel quite comfortable with the overall reserving position. You know that we have, if you look at our contingent provisions and the general provisions and specific, we are quite comfortable at the reserving level where we are. Yes, Nero. Thank you very much. We'll take next follow-up question from line of Hamsini Karthik. Did you audio issues? Hamsani Karthick from Money Control, please go ahead. Yeah, thank you. Thank you. So my question is to Sashi. Sashi, what's the one advice that you gave to Anub just from the point of view of keeping the HDFC ethos intact? do you think is critical for Anoop to sort of take a cue on? I have known him for a month now rather closely, and I realized that we share the same ethos. So I don't think I need to, you know, give him any advice and more so to a person who has 34 years of professional experience in this field. I think both Kaizal and I and Srini, as we move on, we are extremely comfortable and we are very happy that he is going to be leading the team, leading the bank with a very similar ethos. Perfect. Thank you. Thank you very much. Next question is from Reuters. Please go ahead. Hi, good evening, Mr. Jagdishan and Mr. Bhakchi and others. I have one question for you, Mr. Agnishan, and a variation of that for Mr. Bhagchi. Incidentally, it's exactly three years since the first post-merger results, which was the July to September quarter, if I remember correctly. Yet, of course, many of the matrices are not back to where they were. Do you think it's time in some ways, Mr Jagdishon, to accept that this institution is probably not going to be able to match the matrices that htfc bank pre-merger uh used to operate with it might make sort of the comparison a little bit easier uh and you know get investors to start stop obsessing about you know 30 basis points 60 basis points below what the bank used to be and the variation of that for uh mr bakshi would be that uh you know i think stock underperformance has been a key issue right for investors would you sort of want to put that message across that look this This is a different institution. Stop comparing it to what HTFC Bank pre-merger looked like and now perhaps judge us on where we go from here. So, great question, Ira, and thank you for this. Absolutely true. I think, you know, it is, I don't know why we keep on comparing the institution, which is today, as against what it was pre-measure. These are two different institutions altogether. In fact, when you look at this institution and compare to the EHTFC, our matrices are much better than what it was for that. So it depends on how you see the institution, whether it's glass half full or glass half free. But be as it may, the reality is we need to only look at one metric, and that is either the return on assets or earnings per share growth. And I'm telling you the kind of platform that is now, you know, has been laid out in terms of the underlying investments in technology, investments in distribution network. The fact of the matter is a large amount of borrowings have now played down. There are still some amount of tailwinds that is there when the borrowing costs, borrowings mature at a certain point in time. The fact that your cost to assets or cost to earnings will also be on a decline with more, you know, efficiencies kicking in thanks to the advanced emerging technologies that the institution has invested. You're right. You know, it's not necessarily going to be just a top-line number growth. I think my sense, and of course, Anup will unveil it shortly, I think all of you need to just focus on one aspect, that is, how the earnings per share, the return on asset, moves from here into the future. I think all of the matrices are, frankly, not necessary. You know, for example, in the margins, as I think Kaisar did allude, while it may be low-yielding, but when you take the upselling or the kind of non-funded and liability upsell that happens in any corporate relationship, the return on asset is as good as any other segment that we patronize, whether it's a retail or whether it is an MSM. And that's probably, I guess, it's also a matter of communication, which we will start to focus on in the near future, where we will anchor one particular metric. And that is probably not an advice for him, but I am sure this is what I believe as I exit in terms of what the institution is going to be gearing towards. I think as long as all of us are anchoring on one metric and not sort of confusing with many other aspects in the balance sheet and the profit and loss account matrices, I think we should be all right. And you will see this happening over the next two to three years' time. Thank you very much. Ladies and gentlemen, we have come to an end of the time allotted for the call. I would now like to hand the conference over to Mr. Vaidyanathan for his closing comments. Over to you sir Thank you Nirav Thank you all to the participants who came in and engaged with us If you still have anything open please get in touch with our corporate communications team Madhu and the team are available to chat with you at any time Thank you, bye bye Have a great weekend All the very best Thank you very much on behalf of HTFC Bank Limited that concludes this conference thank you all for joining us and you may now disconnect your lines thank you