Mutual fund preference may affect HDFC Bank’s low-cost deposit access, says MD. Credit deposit ratio, NIM, and technology investments discussed.
Sashidhar Jagdishan, the chief executive and managing director of the largest private sector lender, said that after a steep improvement, the credit deposit ratio of the bank will now remain at 96 per cent or decline further.
“…funds moving to mutual funds away from banking deposits that could have some amount of impact on the low cost funds,” Jagdishan said, replying to a shareholder query at the bank’s annual general meeting.
Speaking to reporters on Wednesday, Reserve Bank Governor Sanjay Malhotra had called the preference for equity among savers as a “healthy trend”.
“There is certainly a shift from banking to equity. On the whole it is a healthy trend for the economy… I think we should not be unduly concerned about that,” the RBI governor had said.
Meanwhile, Jagdishan said that the bank had to take a lot of term deposits in recent past to get the CD (credit-deposit) ratio down after merging parent HDFC with itself, and admitted that this also impacted the net interest margin trajectory.
The bank’s non-executive chairman Atanu Chakraborty said we can see greater stability in NIMs once the downward cycle in policy rates is over.
The deposit growth for the bank will be faster than the banking system’s in the future, the MD added.
Meanwhile, Chakraborty said given the current economic environment, the time has come for the private sector to do “heavy lifting” and not wait for demand uptick.
“Time has come for the private sector to do the heavy lifting by not just waiting for uptick in the demand cycle but rather innovating on product design, implementing cost efficiency, and improving delivery systems for myriad products,” he said.
Jagdishan said the bank is meeting many of its technology needs through capabilities in which it has invested itself, and added that a slew of platforms, including a new mobile app, are a result of the same.
The bank is transitioning customers to new mobile app in a staggered way post-midnight to avoid any issues, he said, adding that it ensures more stability.
“Since the window migration is very short, we have a very limited migration on a daily basis. So that particular migration into the new mobile app and a lot of customers will start to enjoy that before the fiscal year is out,” he said.
The bank is also implementing some gen AI capabilities and the result will be for all to see over the next 12-18 months, the MD said, assuaging concerns of the impact on jobs.
If some roles become redundant, the bank will move people within the organisation, he said, stressing that as it grows, it will keep investing in talent.
The overall workforce of the bank stands at 2.14 lakh, and the attrition stood at 22-23 per cent, Chakraborty said.
The chairman said the bank’s Rs 8.35 lakh crore housing loan book will grow faster in the coming years, and added that while the product may not be as accretive from the perspective of NIMs, the low NPAs ensure that it gives stability to the balance sheet.
He added that almost 90 per cent of the bank’s 9,455 branches currently give home loans to customers.
Replying to a query on business presence in the northeastern states, he said the bank has 255 automated teller machines, 121 cash recyclers in the region.