HDFC Bank Ltd (HDB) 2025 Q1 法說會逐字稿

Ladies and gentlemen, good day, and welcome to HDFC Bank Limited Q1 FY25 earnings conference call on the financial results presented by the management of HDFC Bank.

(Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Mr. Srinivasan Vaidyanathan, Chief Financial Officer, HDFC Bank.

Thank you and over to you.

Okay, thank you

(inaudible).

Good evening and a warm welcome to all the participants.

We have Shashi Jagadishan, our MD and CEO with us today.

Without much ado, I'll hand it off to him to get meeting started, and then we'll take it from there.

Shashi, over to you, please.

Thank you, Srini and good evening to all of you.

Yes, sort of engaging with you all after a quarter, just wanted to recap some of the guidance that we have been giving in the past couple of quarters.

One of the things that we have been mentioning is that we would like to desist from providing any guidance of any form, as it is providing distraction from our long-term objective.

So we would like to stay focus.

This is a period of transition, post merger, and stay focus and ensure stability of some of the key metrics and achieve some of the objectives in the medium to long term.

I know that the most important part of our strategy is deposits and are we happy with the kind of numbers that have been that has come about?

Not really.

It has fallen short of our expectations.

But frankly, if you see this, this is not something new.

There is a seasonality in the system and the bank has been tracking this seasonality being a large player in the system.

Our net accretion to deposits normally is in the range that is similar to what is there in the system.

But this time around, obviously, we were a little bit surprised on the period end numbers because of some unexpected flows in the current accounts, which is more than what we had anticipated.

Of course, I would like to recap to all of you all that we did sort of give you a heads up during the earnings call out of the fourth quarter, that we did sort of see lot more unanticipated transitory flows in the current account, if you recall, and that is what has gone out.

So combination of this larger outflow because, we do have relatively higher share of the market in current account.

And so as the balance sheet has been growing, the velocity of inflows and outflows have also been increasing in current accounts, which is the nature of the beast because, for us high economic activity in the current accounts is a sign of good is how we will achieve more larger transactional balances in the current account balances, but on a period end, you will see this kind of a high velocity.

So a combination of outflows in current accounts and a combination of of these $160 billion or sorry, not dollar INR160 billion of an (inaudible) HDFC non-retail deposits, which randown has given us a very, kept it kind of a net accretion on a period end basis.

Now, if you've noticed, you may be surprised that we have started to even disclose in one of the decks, in our investor decks, which probably you may have access to on average deposits as well.

You may be wondering why have we done that?

And let me be honest as to why we have done, it's not something to tell you that, okay, this is not, so the period end is not good.

So the try and show something which is very good, not really.

I think, you know, this is messaging, not just for the investor fraternity, but also to my people at large because, we've realized that, the, we want our ground level teams in our large distribution footprint to focus on basics at the ground level on a day-to-day basis.

Focusing on certain period end numbers is leading to some unintended performance related pressures, which we want to avoid.

And that is the reason why we want to converge the align or [convergence align] or internal and external metrics, so that there is no unintended pressures that builds up in the ecosystem.

If you have you seen the numbers and once you digest the average numbers on a quarterly basis, which we have given from Q1of FY22 to Q1 of FY25, that will give you a reasonable amount of comfort that there is a steady build up, secular trend, upward trend in the momentum, of course, there is some seasonality in some of the quarters, but that's fine.

But largely the secular trend is visible and that's what we want to focus on.

So, much as all of us are used to looking at the period numbers, I think looking at a longer trend on the averages seems to suggest that the resiliency of the organization is in track and continue to be so even in the future.

On the, I have mentioned in the annual report recently, which is released to the world at large that we will be growing slower in our advances as against our deposit growth.

This is not something new.

If you have seen our track record over a long period of time, this is something that has been there.

Probably in the last couple of external forums or the public forums that we have come on.

We did sort of a firm that our focus is going to be on profitable growth, and not just on growth.

And yes, in the bargain, it is in our interest to bring down the loan deposit ratios much faster than what one would have anticipated.

It is in our interest and I'll explain that to you probably when one of you ask questions.

If you see the track record right from the time we merged on 1 July 2023, there was a starting pro forma financials, the day one financially, there's one cause it and probably this is also there and visible to each one of you in a investor deck.

If you look at some of the key metrics, whether it's the NIMS, whether it is the CASA ratios, whether it is the cost to income, whether it's the GNPA, from that starting point to 30 June 2025, it's been range-bound rather stable and range-bound.

For example, the NIMS have been in the range of 3.4% to 3.5% with the increase in bias.

The CASA ratio has been in the range of 36% to 38%.

The cost to income has been in the range of 40% to 41% with a decreasing bias.

The GNPA has been in the range of 1.2% to 1.4%, and if you exclude the seasonality of agri, in fact, it's been properly on a declining trend and the ROEs have been in the region of 1.9% to 2.1%.

And as you know, it may be, this is not a new number, new metric that we have encountered.

We have seen for a long period of time this number of 1.9% in the pre-merger levels as well.

So what does it mean?

The fact that we have maintained stability means that the inherent resilience of both the organizations is intact.

So it's a period, despite the kind of changed environment in terms of liquidity, in terms of competitive intensity, in terms of the, our so-called urge to slow down our loan, so that we can get down the CD ratio of the loan deposit ratio faster than what we had anticipated.

Despite that, I think we are maintaining stability in some of the key metrics.

Having that, that's something that I just wanted to reiterate and want you to sort of appreciate.

I guess these were some of the things that we wanted to mention as a top of the mind, recall.

I think I would be happy to sort of take questions from any one of you.

Over to you.

Okay, thank you, Shahsi for the opening remarks. (inaudible) with that we can open it up for questions.

I do want to draw all the participants attention that if you do need to refer to a deck, I think it's on the website.

You can refer to it if you need to at anytime. (inaudible) we can please prepare the queue and open it up for questions.

Thank you very much.

We will now begin the question and answer session.

(Operator Instructions)

Mahrukh Adajania, Nuama Wealth Management.

Yes, hi.

Shashi, my first question is on LDR.

So when you say, you wanted to possibly LDRs could come down faster than anticipated.

All the large private banks, of course, one is at above 90%, but most of them are on an average of 83% to 87%.

So is that kind of an LDR you are hinting at and over what time frame, because, that really sets things are very clear, right?

in terms of what loan growth to anticipate, and also in terms of loan growth, right now if you see other than CVs, most of retail and most other segments have go grown below 2% Q-o-Q.

I do understand the first quarter seasonality, but if you wish to have focus on profitability over growth and growth remains kind of weakish relative to your historical trends?

Would it be very easy to then regain market share, once you think your balance sheet has course-corrected, right?

Because, you're possibly giving up share.

You can do much better on growth, but obviously, we know the constraints on deposit.

So that's my question on HDFC Bank and if you could explain the high provisioning on [HDFC] financials as well.

Okay.

Thank you, Mahrukh.

Number one, is we don't have, rather if at all, you're expecting that is there a prescription from anybody, including the regulator, whether there is a prescription for a loan deposit ratio.

Not at all.

As I mentioned, it is in our interest to have a glide path.

True, you're absolutely right.

It's theoretically, I would love to do this in one year, but is it feasible?

Is it practical when you have an objective of profitable growth?

Absolutely.

You're absolutely right that it's not something that I can do where I can just drop it in one go.

And then done with this, et cetera.

It's not practical.

And let's go segment by segment.

We have a machinery.

We have to, there is a lot of buoyancy there, whether you know, this much better that funding or providing financing or loans to customers, whether it's the retail segment, whether it is the MSME segment, whether it is the corporate segment is actually a feeder for us in terms of the primary banking and hence liabilities as well.

So, you know, there is an optimal level that you can work with.

You cannot drop the level.

So therefore, we have to, this is a place that we have to manage very gingerly.

There is the realityis, there is a tight liquidity environment, there is, as I mentioned to you and if you really look at the averages, the OP period numbers are not a reflection of what is the underlying resiliency.

In fact of deposits, in reality, the deposit momentum when you look at it, maybe at some point in time, Srini will explain.

The gross inflows across multiple products and deposits have actually been increasing.

It's a very healthy trend.

And as I mentioned to you, one of the things that we do not have some of the controls is the velocity of the flows in the current accounts and which is what has creates this kind of a little bit of what, it's unsettles you with ounces and answers in terms of and number on a particular date.

It has never happened before.

Of course, there may be some instances where it has happened for.

But, so all of you rightfully so are seeing a little bit of a disappointment there.

But when you look at the averages, which I'm sure you will compute, it's rather pretty steady over longest period of time.

So it's not that and even on the advances side, the what has happened in quarter one is not a reflection of what we planned to.

This is kind of an adjustment this happened.

It's a matter of time that you would see in the next three quarters what we do.

We will be, our relationship since you spoke about market share, you spoke about relationships.

We are very clear.

We have one of the best relationships in the corporate side, even though you are seeing a little bit of a negative growth in the

(inaudible).

We have high amounts of already great penetration levels to the best set of corporates in the country.

What we are losing is transactional business consciously because, it's not meeting our pricing thresholds.

We are all right to do so because, we maybe this is the best time for us to adjust our mix, which is what you are seeing a bit of a flavor in this particular quarter.

We want to continue this kind of a mix change over a longer period of time.

Of course, it cannot be forever, there will be, during this period of adjustment, we may have to do it for some time before it sort of normalizes.

But having said that, I don't have a specific number because, then you know, it will sort of bring in a fair amount of pressure on the system.

We have an internal benchmarks for ourselves as to what we need to do.

As I said, neither have we received any regulatory prescription, but at the same time, the thought processes can we to the best of our abilities, try and get this done as quickly as possible with and still maintain the objective of a profitable growth.

So all I can say is, that it's best that you see what we do in the next three or four quarters.

And yes, when I relate this number than what we are planning, I am relating into what we were probably thinking of at the time of announcement of the merger.

Obviously, things have changed.

And we realize that maybe, as you alluded to a lot of other, there's been literature, which has been spelt out in the monetary policy literature on a credit deposit ratio.

So we are very cognizant of the risks that are there in the system and instead of being notched on that, we want to do it ourselves because, it makes the most economic sense to bring it as quickly as possible.

The only two more things that you alluded to that I can describe is that the activity at this various distribution points.

We did add 2.2 million new customer relationships in the quarter.

So last quarter was very similar.

So from that sense, the pace at which the ground teams are operating is quite strong.

So we do get the new account value.

It is those existing customers or the transactional balances in the current account that I've seen that flow.

Now coming to the other aspect that Shashi alluded to on in terms of the inflows, we measure inflows monthly to see what are the credits coming into various customers' accounts at individual aggregate branch level and so on.

When we look at the inflows that come and compare those inflows that are coming to the similar time period last year.

The monthly inflows are up over 20%.

So we do see enormous traction happening in the account, which means the credit flows that are coming, cash that is coming in, given when you say, cash, I mean funds that are coming in is of a good order.

It gets deployed in various means.

But again, this is across Current Account Savings Account, across all of these and the salary.

When you say savings that include, the salary account that we have is gaining good traction from an inflows that come at aggregate level.

Thank you.

And then one other point you had was about the HDBIPO.

I do want to say HDB credit cost.

Okay.

HDB credit cost, the GNPA ratio remained flat at 1.9%.

The Stage three is remained flat.

The credit costs have been higher because, seasonally, again, various reasons you can attribute to various reaching ability during this quarter has been hampered up due to, they are far more distributed into the Interland's than we are.

The heatwave issues and the electoral preoccupation at various list.

So there is a seasonality that was there.

So the early flows have caused that in the provisions to be higher, but the NPAs remain stable.

So the sort of flow into that NPA bucket is limited, but early, they have to do more on that.

That's where.

Okay.

Thanks a lot, thank you.

Chintan Joshi, Autonomous.

Hello, hi.

Can you hear me?

Yes, Chintan, go ahead.

Yes.

Thank you.

So if I can start off with the deposit market share question.

It's a historically, you've done about 18%, 19% you know, if I look at the last five, six, five, six years.

Last year was about 12%, if my numbers are correct and it's a much more healthier banking system, everybody is well capitalized on the front foot asset quality, risks are low.

In this environment, like would you hold yourself to taking a certain amount of incremental market share over the next two, three, four years.

You know, do you think like that?

And if you do then you know what can we expect in terms of market share?

Because when we think about deposit growth, that clearly is a challenge for the system.

So, and of course, therefore, all the other banks, all the banks will face that constraint.

But in terms of market share, would hope that HDFC can show that historical trend.

So that would be one question and then I have one more.

Chintan on the market share, if you see that, yes, you are right, that if you look at us over the last three, four years, in 2020 March, we were more closer to 8%, slightly above 8%.

In '24, slightly above 11%.

So over a period of, say, three, four years, we have got a little more than 300 basis points out of which 50, 60 basis points came through the effect of the merger.

Other than that, call it 50, 60 basis points a year is what we have added on a market share.

I do want to mention that the opportunity space to gather the market share remains.

I want to remind that our distribution market share, the distribution share that we have, that 6%, right?

So we have a little, not exactly 2, maybe 1.8 times of distribution share is what we have from a value market share point of view.

We do have about half of our offer for branches, which are more than 10-year vintages, which are having a market share, at least 20%, 30% more than our average.

And then another half of the branches are lower vintages.

That means in the last five years or so, which have market share far lower than the average.

So with an opportunity space has been mature to come and gain.

Yes, our our objective of getting the distribution reach expanded and getting the customer onboarded is to work on getting this market share up and we are confident that that's the direction in which we have previously gone and the speed at which we are going now gives us the confidence that we are in this to get further deeper on the share.

And this applies across all of them from a time deposits to current accounts, we did, Shashi did did allude to current account how we got INR540 billion in March quarter and we did have a rundown of utilization of the customers of INR430 billion in the June quarter.

Despite all of that, we are the largest current account bank, right?

We are the largest current account, current account constitutes currently 11% of our total deposit stack.

In March, it was about 14%.

So yes, it moves around that.

Despite that we are the largest between the current account all the time deposit and so on.

And, Chintan just to (inaudible), you mentioned that our incremental market share was around 12%.

I think it's a bit higher and there's a different way to competed, but 12%doesn't seem to come to our max anyway.

Understood.

I was looking at the flows, but we can talk about that offline.

The other question I had was, in terms of, just detail, a couple of detail questions.

So what is your current shortfall in the SMS category [XPSLCs?] And was there any impact on the (inaudible) from reclassification?

Can you repeat the last part?

Sir, was there any impact on NII from reclassification of investments, and then the shortfall in SMS category

[XPSLC?]

Yes, the SMS category as of March, which we have published in our report of our various disclosures, the SMS category target is, of course, the obligation is 10%.

We were close to 9% in the past year.

But as of June, we did not see much.

We have tried to close as of June, and it's an ongoing number, right (multiple speakers) number as every quarter it changes.

So that's one.

Then from reclassification, when we reclassified the new accounting on investments got adopted on a post-tax basis, it was slightly under INR500 million, INR480 crores or something that has gone to general reserves.

Thank you very much.

Sorry to interrupt Chnitan, kindly come back for a follow-up question.

(Operator Instructions)

Suresh Ganapathy, Macquarie Capital.

I have two question.

One on the (inaudible) I mean, (technical difficulty) Yes, okay, so if I'm looking at the last few years, RIDF bonds and PSLC that you bought, it's gone up 25%, right?

And (inaudible) this is remember when your base is INR16 trillion and it shoots up to INR24 because of the last year's high base.

Now, are you confident that, you know, you can meet some of these obligations, especially the shortfall in the SMS and still protect your margins because, it is getting a bit tougher now going higher?

That's the first question.

And the second question is on cost itself.

Now seen three or four quarters will be the (inaudible) is still broadly very range bound at 40% to 41%.

I remember, Shashi (inaudible) giving a target, I know this was pre target, pre [dose] gave and you have to give target longer term, we want to take it down to 30%.

Are you very confident that you are well on that part, considering there are so many pulls and pressures now the system?

I will stop there.

Suresh on the (inaudible) see the way the math works is the RIDS is for the entire book, including what was the power shortfall.

You cannot compare the book RIDF, the PSL series of flow through the P&L.

So it's the way to compute.

This is not to see whether the book RIDF and the PSLC divided by the balance sheet to see whether the growth or not.

It's cumulative needs to be thought through differently.

And then we'll chat offline on that one, but it's, from a direction wise, if you see annual report as well, you'll see that year-on-year, we have become much better in terms of compliance, and that's something which will continue to do.

So Mr. Ganapathy, on cost to income, yes, in the medium to long term, that is the glide path that I have and I'm reasonably sanguine that we will do.

But as I said, then probably, if you recall, there is a period of adjustment that we have to go through where unfortunately there are some long-term borrowings where I'm sure even that those kind of maturities would be there at the annual report.

So we have to wait for that, [Philip], or the lift that will come in revenues as the bond matures and gets substituted by probably deposits.

So we have to wait for that.

But having said that, in a period of this, as you alluded to tough economic environment, maintaining stability of the cost to earnings with a downward bias itself, I would say is very commendable for a large organization, where we are not going to be compromising on strategic investments like distribution or technology.

I'm very clear about it.

So, you know, what we are trying to do is how do we juice out and efficiencies out of digitization, out of better productivity.

So the intensity is now there across the organization how we can step up that.

So I'm, as I said, the proof of the pudding is in the eating.

You have to be patient, wait for this particular FY25 for you to see it for yourself, as to where we land and then you know, that will give a lot of confidence to you that, yes, we are in the trajectory of having the numbers that we had envisioned in the medium to long term.

Okay.

And then we are on the [NPSC] one app, where you can, not exactly an app other very one to really cross-sell and bring everything as the group products under one umbrella, [since] we're far away from that?

Are we very much in that direction to get it executed?

Good question.

I think, the first step was to ensure that the franchise, especially the home loan franchise starts to get incrementally the primary banking or the savings accounts of the home loan borrowers.

And I think this has been probably in the, it's in the public domain where incrementally we are now doing what percentage of our home loan borrowers are taking (multiple speakers) upwards of 85%.

So you know this very well and still you're asking me these questions, very good.

Now, as I said, the bundling of other products such as the consumer durable loans, the credit card, the insurance and all is, has commenced that of the first one that we wanted to, but now we have commenced.

The journey from the subsidiary companies, especially the insurance is expected shortly then probably the seamless frictionless experience, the frontline people to cross-sell with one-click experience will probably even enhance it even further.

We are whilst, we're talking about this, I must also sort of add, whilst we have not put in the public domain.

There has been and the reason for that is we want to, you know, have a sizable amount of success there and then we will try and to put this out.

We have had reasonable amount of success in the stock of home loans, which did not have an HDFC bank account, the kind of success we have seen.

I'm not sure of, probably I know you will be very eager to know what that number knowing you very well.

But give us some more time, let us see the success at a substantial momentum and then we can sort of publish it.

It's not going to be too long before we start to do that, but you will be surprised at the kind of efforts is going down at the ground level ever since the announcement of the merger.

Obviously, this is something that even surprised me of the efforts.

And when I do that, you will see that.

So obviously, the, you know, this is not something that can happen overnight in terms of the impact.

But whatever we were, it gives us a lot of satisfaction as to what's happening.

Now coming to the other aspects of the subsidiary, leveraging on our distribution strength.

I think you may have since you cover the insurance sector as well.

By now, you should tell me that we have seen a fair amount of step-up in the distribution of the subsidiary, especially on AMC, especially on the general insurance, especially on life insurance, where the share of their businesses have also been stepped up reasonably well.

It's not that we are favoring one, it's purely, we continue to patronize open architecture.

So it's a lot of hard work that all of them have put in together to sort of enjoy a higher distribution from our franchise.

So I think it's moving in the right direction.

If anyone is expecting a magic wand and it's going to be very, have a geometric progression overnight, that's not a fair expectation.

But there is a positive glide path which is moving upwards and you probably have these numbers and at some point in time, we may even call out these kind of numbers appropriately.

Thank you.

Thank you.

(Operator Instructions) Ravi Purohit, SIMBL.

Yes, thanks for taking my question.

Sir, two questions.

One is basically, the debt reduction that we've seen in the last two quarters, there has been a significant drop in the borrowings, INR75,000 crores in the March quarter and about INR60 odd thousand crores in the June quarter.

So this basically helping us kind of deleverage the book.

Can you just help us understand what is the, I think in the annual report, we mentioned that about 15% of the HDFC borrowing book is due to kind of mature every year for the next three years.

So if you could just kind of because, last two quarters we've seen this big drop in borrowing.

So if you could just kind of help us understand the part where these borrowings are getting repaid?

And second question was, you know, on the deposit side, there was a fair bit of amount which HDFC Limited used to have.

So and lot of corporates is to have deposits with them.

So is it fair to say that a lot of those deposits kind of vanished the minute the merger happened.

And therefore, what we are seeing in terms of deposit accretion within the system is actually is the large part which got taken out which was slightly larger size or corporate deposits kind.

Of you could just kind of give us some sense of, you know, where this thing is moved between then and now?

Okay.

Ravi your thought process and assumption is correct that on the HDFC Limited deposits, that came INR1.5 trillion.

Certain components of that was corporates or trusts or certain institutions which have been pricey.

And you saw that over the last three quarters in the December quarter, we alluded to some extent, March we did, and even in this quarter, we gave you even the number in one of those other questions, INR160 billion that went down in the time deposit.

There of the right order and we prefer much more retail branch driven.

And if these are rate sensitive or if the other participants in the market say, a higher price to take it.

That's fine.

So that as that is done.

So that is one on the deposits that you asked.

Second aspect on the borrowings.

Yes, even if something more needs to go, it will go because, we will not be bidding for a higher and higher price to keep a larger ticket size deposits with us.

Secondly, when the question you asked on the borrowings, yes in the quarter, we did take down close to INR60 odd thousand crores or INR600 billion of deposits down, borrowings down.

About INR150 billion was commercial papers, which matured and we had to run it down anyway.

We don't like that because, we don't do, banks don't do.

And so when the maturity came, it went out and we had enough to pay that down.

And the second thing is that of the balance.

Borrowings are roughly half and half.

Part of them off, of it was maturity, which we paid down.

And part of it was we had an opportunity space to pay down which we did, which is what even in the [average] balance sheet that we've published you will see that it is borrowings are down by close to INR600 billion.

That's, this is most of that

Can we sustain this run rate or would a bulk of it has already been kind of done for the year?

There is some maturity profile.

For the year, which were published, for the year, I think the maturity profile is about INR650 billion for the year.

That is scheduled maturity, INR600 billion for the year.

Out of which, maybe INR250 or so INR1,250 billion were maturity that got paid in June quarter.

And we did pay, in, on top of that maturity, we did do certain other payments.

We exercise certain options to do that, certain other borrowings we did.

And so we (inaudible) to come in the year.

That's part of what we're published in the annual report, the profile over the next three, four years, we publish that profile of maturity,

One question for Jagdishan.

Sir, at the time of the merger and subsequent to that and in some of our communications, we had mentioned that the merger is likely to be EPS accretive for us on day one, from day one, right?

Now was that, did that have certain assumptions of, you know, from either the regulator allowing us for, let's say, for infrastructure bonds or certain other classifications and those have not materialized?

Or is there something else that was in terms of assumed and that has not played out.

If you could just kind of, you know, help us understand a little bit on that.

It will kind of appreciate why you know what deviations that happened between then and now?

Those are my questions.

Thank you for giving me this opportunity.

Ravi, yes, at the time of merger, you know, the economic conditions, including the liquidity system, liquidity and RBI stands on how the economy and the funds in the country were managed was at one state and today it is at a different state, right?

So the conditions have changed.

That's that's number one.

And number two, some of the forbearances, for example, be the forbearance on infrastructure borrowing, qualifying to fund the affordable housing or on certain of the deposit category, the non liable deposits category that we took over some of those assumptions are different.

That's the second aspect.

Third aspect, I do want to draw your attention to the EPS since you mentioned it.

The EPS for the bank, June pre-merger was 21.4%, and last year, June.

And in this quarter it was 21.3%.

So thereabouts, right, it is a similar levels and then if you look at this quarter, it's between that 21% one 21.6%, 21.7%, 21.3% and thereabout from an EPS point of view.

Okay, thank you and all the best.

Thank you, Ravi.

Kunal Shah, Citi.

So the question is on PSL again.

When we look at it, almost like 53%, but again, that's on last year's balance sheet.

But looking at it in terms of the sell-down (inaudible), which have been there in PSL, what we have disclosed in the annual report.

And the overall ERV growth also being lower.

Is that giving an indication that we are relatively more comfortable on PSL?

And then in that context, how should we look at the overall ERV growth vis a vis the overall loan growth?

So Kunal, on the PSL, two aspects to keep in mind all the time, which is, there is a small and marginal farmer.

A weaker section, which could have dual qualification.

If you get a small and marginal farmer, it could have dual, it will have dual qualification and weaker will be satisfied.

So that is one category that is in greater demand.

We need that.

We need more of that.

So that is something.

Other than that, you alluded to CRB, that is why I'm talking about it.

That particular segment is driven largely by CRB and by non CRB, which is agri segment, the SLI segment and various other business lines, which have some linkage to agri or allied agri, also bring in, but largely CRB.

But however the rest of CRB, when you think about the business banking or think about certain emerging enterprises and commercial vehicles and a lot of other categories, which are also enormously PSL driven book.

It qualifies as total PSL, but we are quite comfortable.

We are surplus in all of those categories.

So our focus.

If you think about PSL for us, which I've always said is that our focus is how do we get as much as possible, the small and marginal farmer and with the dual qualification for weaker.

That is where and it's not that we are reaching out to 225,000 villages to get that reach to be there, but even if you get in all of those small and marginal farmers for the ticket sizes that we could offer to them because, that's what our credit will offer, cannot be offering outsized to the land because, a smaller margin farmers having a small farm.

So the credit could be only to suit that farm and not 2x, 3x, 5x platform requirement.

So that's where the constraints come from.

So we need to look outside of our organic approach to see if anybody else having that we can buy.

So I hope that helps you.

So you don't need to directly link to what CRB and PSL.

It is only a component of the CRB, small and marginal farmers that we are more focused on.

And

(inaudible)

Kunal, sorry to interrupt.

Can you speak through your handset, please?

I was saying, maybe (multiple speakers) are we more confident in terms of the achievement we have been (inaudible)for PSL as well?

We are, we have good amount of confidence to be there where it is available.

It's a question of supply, right?

We are there creating the demand.

We are there to buy.

We are there to originate.

It's a question of availability.

That's where we are constrained and last year we managed to close enough, this quarter we managed close enough.

But future I will not be able to talk to what's available and, but we are present that's all.

And secondly, on the deposit side, as you mentioned, like not really so Sashi also in the opening comments, highlighted, not really (inaudible) and it has fallen short of the expectations.

Earlier we alluded in terms of the aggression on the field staff, plus the expansion in the branches.

That is something which will drive the deposits, but somehow it's not coming through.

So what could be the initiatives now and would rate be able ever be looked upon?

Okay, because we are not getting the benefit from the other two getting reflected in terms of the incremental deposit share.

And similarly, when we look at the borrowings, almost like say, 60% of the borrowings are coming up for a maturity in less than three years.

So at the end, we mentioned like we would (inaudible) some prepayment opportunities as well.

So how do we gather that deposits, or maybe loan growth could be much lower?

Kunal, the first thing is that rate is not predominant, determinant or driver for us to have an engagement.

You've seen that you can compare our rates.

We don't get into a rate competition.

We are priced fairly with our peers.

So rate is not something that we want to use to get or gather more deposits.

So that's one.

So let's get the rates out of the way.

That's not something that predominantly influences us.

Having said that it is about that engagement and service delivery.

That is what we endeavor to distinguish differentiate get on more customers.

And that is the reason I alluded to talk about the inflows.

That means the engagement and the service delivery should create more of our customer funds coming into our accounts, which is what I alluded to in another context of someone's question that when we look at the June quarter, we measure that monthly.

The monthly inflows that come are in excess of 20% higher than what it was similar time period last year.

So we see that traction gaining.

It's a question of, both the environment and other opportunities and the spend levels that the customers see, that balance is out.

Essentially we are there and the opportunity is there.

It is going to stick more the probability of fixing and resting with us is far more.

Kunal to sort of look at the 12 quarter data that has, that is in front of you all, and look at the quarterly momentum that will give you a reasonable amount of confidence as to how the buildup is reasonably resilient.

And there's a lot of hard work that the team is doing at the ground level, and that's a real reflection.

Our earnings come out of these averages, the daily averages.

So this is, it's unfortunately as historically we have been reporting period end numbers, but I also realize that maybe, you know, it's not the right way to reflect things which are where there are lots of volatility.

And yes, it may, as I again reiterate, is a bit disappointing to see on a period end something very tepid.

But in reality, my teams have done a lot of hard work and I want to acknowledge to this particular call that to, for them to continue the intensity of engagement and the kind of hard work that they have been putting, of course, so that there's no pressure on them on period-end numbers.

They continue to work hard on a daily basis to be able to deliver the organization goals.

And I'm sure, I'm very confident that my team is going to surprise all of us, including you all when we publish the full year numbers.

Thank you very much, Kunal I request to come back for a follow-up question.

(Operator Instructions)

Rahul Jain, Goldman.

Yes, hi, good evening, Shashi, Srini and (inaudible) I had three, four questions.

First is on the margin trajectory, right?

So the governor recently talked about, again, the transmission of pricing.

We are seeing massive fight going on for deposit market share.

And HDFC Bank has been very, very disciplined on pricing.

So any point in time, do you need to relent and then start increasing the deposit rates.

How do you see the scenario shape up for you all and what would be the impact on margins because we're trying very hard to kind of maintain it or keep improving it.

So in this scenario, how do you envisage this profitability to shape up for you all in the coming quarters?

Rahul, if you look at the, there's one public available data is this weighted average term deposit cost and, I think that's get published by the in the regulatory website or something.

You can look at it.

And when we look at it and you can look at it over the last 12 months by month, you can see which every bank reports.

The top of the page is what you will see the PSU bank weighted average term deposit costs going up and the three line graphs, if you draw, one top being the PSU banks, the second being the scheduled commercial banks and below that will be the HDFC Bank, right?

So we have tried to remain disciplined on price as much as possible to win over the customer through engagement and service delivery.

So we have not gone into this term and in terms of the rate as such, and we hope to keep that up as we go along.

So that's not something.

Now how do we get the margin, right?

Again, by the way, it is, we've talked about it, CASA.

Market permitting, you know that in this quarter the market did not permit the CASA growth.

We had only time deposit growth, and the CASA ratio through the cycle as it changes, we'll have to move up and that is what has happened historically.

That is our confidence level that our engagement will keep that CASA to go up.

Bringing new customers, the customers are coming in.

We are getting in with the balance of savings account balances and the cohort, the month on book cost of savings account balances of the customers we bring in are behaving quite encouragingly, and we want to bring in more of the new customers to move that up.

So we keep going up on that, and we have to wait it out for the cycle to turn and customer preference to change for the CASA mix to come favorable to us.

The second, as and the whatever the CASA mix you see today is impacted by about 3 percentage points or 4 percentage points due to the merger because, when we came in to the merger, we got the time deposits only as part of the merger.

So that's the impact that is coming in addition to the to the market dynamics of customer preferences over the last two to three quarters because, also the merger impact that has impacted there.

I just want to leave it there and go to your next.

Thank you very much.

I request all the planned participants due to time constraint, we won't be able to take more than one question per person.

Manish Shukla, Axis Capital.

Yes, thank you.

On unsecured personal loan, job growth has been sharply lower than some of the peers.

What's your thought process on that segment and how do you think that changes?

No, that was a very conscious call.

I mean, as I said, we, our internal early systems probably take this up early.

And obviously they have been rather conservative.

And that is the reason why we were alright and happy to sort of slow down growth.

And we were, of course, this synchronizes with what the regulator has been sort of highlighting as well.

It has been contrary to what we've seen in industry growth.

And we have been contrarian to not just now, but even the past.

So I guess the right time, we will step up the pedal

One data point, what is the share of the (inaudible) book as of June?

Sorry?

Share of (inaudible)book?

(multiple speakers)market linked is about total 30%, 70% or 36% and 70% is external.

Mortgages will have about 27%.

Nonmortgage is about 40%, which is externally we allowed

[linked].

M.B. Mahesh, Kotak Securities.

Hi.

Just one question on the noninterest income line.

This miscellaneous income has gone up quite sharply.

So just trying to understand what's driven that?

And also on the fee income line, there is a slowdown, but largely the growth has come from third party products.

If you could just kind of give an explanation to that.

Mahesh two things happened here.

The third party products is seasonal.

March quarter highest, first quarter comes down.

Miscellaneous income has got recoveries, credit recoveries as well as it has got dividends from subsidiaries that is also seasonal and more or less offsetting, right?

as you see there because, the third party seasonality comes down in the first quarter and then you have the dividends coming in and so they are there offsetting.

So these are the two items there.

Sameer Bhise, JM Financial.

Yes, hi, thanks for the opportunity.

Just wanted to ask on the HDFC Limited borrowings that you have mentioned.

Is there a case for any repricing in terms of floating versus fixed for what is due for repayment over the next three year?

A good amount of that is fixed to good amount also, we are hedged.

We have hedges on some of them and where there is a floating rate, again subject to periodic discussion and negotiations.

Okay.

But you would see a large amount is fixed in it?

There is a combination of fixed and floating, both are there.

And if it is fixed, we have some hedges, if it is floating, some are negotiable and some are not, and so it's a combination.

It's a quarter-to-quarter, month, actually month-to- month review in our [Alcoa] to see how to optimize it.

What are the opportunity space that opens up.

So there's no one aspect that we can sink ourselves to say this is what will we do.

In fact, I'm not too sure whether the data is there.

But when you look at the modified duration of our assets and liabilities, the very fact that, the it is more or less in a very narrow band.

Gaps are much lower, means that what Srini is saying is what we do and this is not something that we are doing it now.

We've been doing it for a long period of time to ensure that these are a match in a very narrow band.

So that's one of the reasons why we are able to see the margins in a range bound in a band of whatever that you, I have specified or had laid out at the beginning of the conversation.

(inaudible) before the merger or after the merger?

The gaps remain very closely and tightly managed.

Yes.

And just one last thing on staff costs.

So well, there was a one-off last quarter.

There is bit of a jump even on a sequential basis for this quarter.

Anything to reason to it?

No other than a quarter-to-quarter impact because some people additions of last quarter could have been part of the quarter coming into the full quarter, this quarter.

Those kind of changes will be there and certain compensation changes can, could have will happen, will continue to happen as we go along.

So there's nothing new other than the (inaudible) amount that was there last quarter and not this quarter.

Thank you very much.

I do not know where you are seeing an increase, but that's a different.

Thank you, sir.

Ladies and gentlemen, we have come to the end of the allotted time.

I would now like to hand the conference back, Mr. Vaidyanathan for closing comments.

Thank you to all the participants for having joined today.

We appreciate your time and thanks for engaging with us.

If you do have more questions, comments, suggestions any other inputs, feel free to engage with us, our Investor Relations team headed by [Bhavin] and will be available anytime and or I will make myself available sometime, we could engage.

Thank you.

Bye bye.

Have a great weekend.

Thank you very much.

On behalf of HDFC Bank Limited, that concludes this conference.

Thank you for joining us and you may now disconnect your lines.

Thank you.