HDFC Bank shares came under pressure after the Oct-Dec earnings numbers due to slower than expected growth in deposits and compression in net interest margin
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HDFC Bank chief Sashidhar Jagdishan
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HDFC Bank was conscious in not accepting high cost deposits which have resulted in slower growth in the Oct-Dec period, Sashidhar Jagdishan, MD & CEO of HDFC Bank said during an interaction with Goldman Sachs on Monday.
He said during times of liquidity tightness the short terms harden as was in the case in the Oct-Dec period.
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тАЬWe collectively took a call not to participate in the incremental [deposit] flows. Which means not only we participated, but we also gave up which came up for maturity,тАЭ he said.
HDFC Bank shares came under pressure after the Oct-Dec earnings numbers due to slower than expected growth in deposits and compression in net interest margin. The share price recovered in the last one week, which closed at Rs 1417.10 on Monday, marginally down (0.2 per cent) from previous close.
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Last Updated: Feb 19 2024 | 03:59 PM IST
тАЬThat [letting away deposits] will mean it will be way below expectation тАжas we say one swallow does not make it a summer тАУ it was said in a positive aspect, I am saying it in the reverse aspect. It does now mean we have a problem,тАЭ Jagdishan said.
In the third quarter, the largest private sector bankтАЩs deposits grew by Rs 40,000 crore as compared to Rs 1.1 lakh crore in the second quarter of the current financial year. The banking system liquidity which was surplus for a long period turned into deficit mode by the middle of September and stayed in deficit during Q3.
The slower accretion to deposits will not impact the bankтАЩs profitability, Jagdishan assured.
тАЬIt you take a long term average we have continued to meet expectations. So this is something we took a call and even if it continues for a couple of quarters we are alright, we are sanguine about it. We feel that our earnings trajectory should not be impactedтАж You will see the trajectory of profitable growth continuing,тАЭ he said.
He said the bank has been adding roughly 50-60 bps of incremental share in the deposit market per annum which translated into 15-20% growth quarterly which is much higher than the deposit market share which is 10-11%.
тАЬIt speaks volumes about how the distribution is well poised in terms of granular focus, and the ability to raise the bar in every passing year,тАЭ he said.
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