Analyst Concall
RBI stance change a welcome move, says HDFC Bank mgmt
This story was originally published at 20:05 IST on 19 April 2025
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--HDFC Bank: RBI stance chnage from neutral to accomodative a welcome change
--CONTEXT: Comments by HDFC Bk mgmt in analyst call post Jan-Mar earnings
MUMBAI – The change in the Reserve Bank of India's monetary policy stance to accommodative from neutral in the April meeting is a welcome move for the banking system as it will help with overall liquidity conditions, top officials at HDFC Bank said in a post-Jan-Mar earnings analyst conference call. "RBI intends to increase durable liquidity, which is followed by concrete actions, which along with rate cuts will help in supporting GDP growth," Srinivasan Vaidyanathan, chief financial officer of the bank, said.
Going ahead, the bank plans to grow both assets and liabilities on par with the rest of the industry, the management said. In terms of asset quality, the bank aims to keep it "pristine," they said. However, there are headwinds to the bank's cost of funds, as customers are now preferring time deposits, which are more expensive for the bank.
The bank expects the cost of funds to remain very stable at about 4.9%, the management said. Talking about the net interest margin of the bank, the management said that looking at quarterly data is not very helpful. "You have to look at it for least a year or longer than a year to see how stable it is and how we are managing that margin level," Vaidyanathan said.
In terms of transmission of policy rates, the transfer to loan rates for a substantial sum occurs automatically due to the connection to policy rates, the management said. Moreover, on the deposit side, it is necessary to oversee it and communicate it following careful consideration. "We remain optimistic and maintain a proactive approach to capturing market share," Vaidyanathan said. "Therefore, we believe that rate was never a differentiator previously, and we do not consider it a unique factor for success, as that would represent a transient and short-sighted strategy. This is our position regarding deposits; we consistently operate in a level playing field and are confident about how we stand," he said.
Top officials of the bank also reiterated their commitment to bring the credit-deposit ratio below the 90% mark by the end of 2026-27 (Apr-Mar). "We do expect that FY27 is when it (CD ratio) will come below the 90% mark. So at this moment, there is no other approach that we are having. And we continue to power on getting the right kind of deposits at the right price to keep that leadership position in gaining market share," the management said.
The bank released its earnings earlier in the day. The net profit of the bank rose 6.7% on year to INR 176.16 billion in the quarter ended March. On Thursday, shares of the bank ended 1.5% higher at INR 1906.70 on the National Stock Exchange. End
Reported by Kabir Sharma and Cassandra Carvalho
Edited by Ashish Shirke
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