HDFC Bank CEO Embraces Slow Growth Amid Fierce Competition

HDFC Bank Announces Rs 1,500 Crore Ex-Gratia for Merger Efforts, Embraces Slow Growth Amid Competition In a move to acknowledge the dedication and hard work of its staff during the merger of HDFC Bank with HDFC Ltd, the bank has declared an ex-gratia payment of approximately Rs 1,500 crore.

During an analyst call, HDFC Bank CEO Sashidhar Jagdishan emphasized the bank's willingness to adopt a slower growth trajectory amidst heightened or irrational competition in deposit mobilization and loan expansion. Jagdishan underscored the bank's commitment to quality over quantity, prioritizing risk management and margins.

HDFC Bank's financial report for the fourth quarter of the previous fiscal year revealed a 37% year-on-year increase in net profit, reaching Rs 16,512 crore. However, the net profit saw only a marginal 0.84% growth quarter-on-quarter due to a floating provision of Rs 10,900 crore during the same period.

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In the medium to long term, the bank aims to enhance its profitability metrics, focusing on return on assets (RoA) and earnings per share. Jagdishan emphasized the significance of sustaining the deposit franchise, particularly the retail segment, to maintain momentum and ensure sustainable growth.

The ex-gratia payment for staff aims to recognize their efforts during the merger and subsequent challenges, amidst high attrition rates in recent years. Jagdishan highlighted the team's resilience in adapting to new norms and overcoming adversities, describing the ex-gratia as a token of appreciation and motivation for the workforce.

The one-time ex-gratia payment was facilitated by a one-off gain from the bank's stake sale in its education subsidiary HDFC Credila. Despite robust deposit growth in the fourth quarter, the bank's credit-to-deposit ratio decreased to around 105%, with a liquidity coverage ratio of 115% as of March-end.

Jagdishan acknowledged transitory flows contributing to deposit mobilization in the fourth quarter, emphasizing the healthy growth in retail deposits. He reaffirmed the bank's commitment to customer engagement and service-centric culture as drivers of sustainable momentum.

Overall, HDFC Bank's strategic decisions reflect its steadfast commitment to quality, resilience, and appreciation for its workforce, positioning it for continued success amidst evolving market dynamics.