Keki was speaking at the Times Network India Economic Conclave today.
Recent fall in HDFC Bank and HDFC Following the merger announcement, he said the decline in shares was “very short-lived”.
“We haven’t been able to communicate the merits of the merger very clearly and in a clear way because of the fact that we all have our results,” he said, adding that our results are in a time frame of eight days or nine days. will be in ,
During the results, Keki said that “a lot you can’t talk about.” And so, he said that during the merger, “we weren’t able to communicate as much as we wanted to.”
However, Keki also pointed out that the day the merger was announced, both HDFC and HDFC Bank’s shares were up.
“You should also remember that the day the merger was announced, the stock price increased dramatically,” Keki said. Thus, they suggest that the decline in HDFC Twin shares should not be compared with the peak level after the merger but before the announcement of growth.
Keki revealed that they have been working on the merger plan for about two-and-a-half months. But a very limited number of people were involved in the discussion, he said.
Talking about the reason behind the merger, Keki said, “The strength of the combined balance sheet will be so great, it is going to be a huge benefit to the economy.
Elaborating on how the merger benefits the shareholders of both the companies, Keki said, “First of all HDFC is a housing finance company and it has higher cost of funds as compared to banks. When we move to a banking structure , then HDFC’s total cost of funds itself will come down – meaning money will be available at a lower rate, cheaper rate to fund the mortgage business.”
Secondly, Keki says that HDFC will benefit from distribution across more than 6,500 branches of HDFC Bank. He said, “Today, not all branches of HDFC Bank disburse sourced home loans. Because, we wanted the bank to get the loan at places where we had our nearby offices as we wanted to keep in touch with the customers. Were. Customers, etc. But it will no longer be necessary.”
Third, Keki said, all banks are mortgaged, but not every bank has been successful in doing home loans, but HDFC Bank has. We have an average CAGR growth of 15% to 16% in retail housing loans. We managed this growth with total credit loss in the personal ledger that has been close to 2 basis points.”
Next, Keki said. “We have the lowest operating cost structure in a retail financial institution which is around 8.1% which is a cost-income ratio,” it said, adding that “banks have a very high cost-income ratio.”
“So the combined cost-income ratio in the merged entity comes down,” Keki said.
Pointing out the benefits of cross-selling, Keki said, “So today, when we look at our customer base, almost 70% of our customers do not bank with any other bank than HDFC Bank. Among them Many people understand well. – Being for HDFC we have enabled them to buy one of the largest occupancy houses. Generally, most of them are happy with our services and so on.”
“So if we go to these people and say look we are one entity and why don’t you transfer your entire banking relationship to HDFC,” Kekey believes the combined entity will drive the customer base .
On April 4, HDFC Bank announced that HDFC Bank will merge with parent HDFC Bank to enable seamless delivery and leverage of home loans to its large base of over 68 million customers and inter alia in the economy. Credit will improve the pace of growth. The proposed transaction is to create a larger balance sheet and net worth which will allow greater flow of credit into the economy. It will also enable underwriting of big ticket loans including infrastructure loans, urgent requirement of the country.
HDFC is set to announce its financial performance on May 2. Meanwhile, HDFC Bank has already announced its Q4FY22 result earlier this month.
HDFC Bank posted a standalone net profit of 10,055.2 crore for the quarter ending March 2022 (Q4FY22) period, which is a growth of 22.8%. Net Interest Income (NII) in Q4FY22 was 18,872.7 crores, an increase of 10.2% per annum. While the core net interest margin came in at 4% on total assets and 4.2% on an interest-earning asset basis.
As on March 31, 2022, HDFC Bank had a distribution network of 6,342 branches and 18,130 ATMs/Cash Deposit and Withdrawal Machines (CDMs) in 3,188 cities/towns, as against 5,608 branches and 16,087 ATMs/CDMs in 2,902 cities/towns as on March 31 . , 2021. 50% of our branches are in semi-urban and rural areas.
However, HDFC has announced provisional figures of its debt, investment and gross income for the quarter ended March 31, 2022.
In Q4FY22, HDFC allotted personal loans to: 8,367 crore as compared to 7,503 crore in the corresponding quarter of the previous year – registering a year-on-year growth of over 11.5%. Meanwhile, the amount of personal loan sold in the last 12 months 28,455 crore (PY: 18,980 crores). In addition, HDFC has assigned 1,500 crore standard, non-personal loans during the quarter under review.