Q4 2026 HDFC Bank Ltd Earnings Call

Speaker #5: As you can see, there is positive momentum as we had expected. Deposit growth rate at 14.4 percent continues to grow faster than the credit growth, which is what we have always been doing.

Speaker #5: The growth rate is better than the system growth rate yet again. Net income growth clocked at 11 percent, similar to the last financial year.

Speaker #5: Whilst EPS growth was 10 percent versus 3 percent last year, the yield on assets had a faster transmission as against the deposits on a full-year basis, leading to a NIM drop.

Speaker #5: Despite the drop in NIMS, the return on assets continued to be stable at 1.9%, due to cost efficiencies, with cost to income declining from 40.5% to 39.5% on a core basis, and focus on quality growth reflecting in lower credit costs.

Speaker #5: I would like to remind you of the sizable investments we made over the last five to six years, which will bear fruit in the coming years.

Speaker #5: These investments were despite us witnessing significant events such as COVID, a complex and one of the largest mergers in corporate history. The distribution nearly doubled to 9,700 branches.

Speaker #5: The number of customers nearly doubled to 100 million. Our tech investments more than quadrupled to around $1 billion. The merger with mortgage company HDFC Ltd too is an investment for the future.

Speaker #5: The bank navigated the same in a stable manner over the last three years despite changing economic outlook and regulatory stance. The above has got to provide a huge operating leverage for the future.

Operator 2: Ladies and gentlemen, good day, and welcome to HDFC Bank Limited Q4 and Full Year FY 2026 Earnings Conference Call on the financial results presented by the management of HDFC Bank. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. 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, Mr. Vaidyanathan.

Speaker #5: Sometimes all of us have sharp memories and forget the core business foundation, which remains our moat and strength. Customers, at 100 million, continue—we continue to acquire about 6 to 8 million customers a year.

Speaker #5: This will be the funnel for future growth. Twenty-two percent of our customers are actually 30 years of age. Forty-two percent are less than 40 years of age.

Speaker #5: This enables us an opportunity to engage through their life cycle, which would be the future engine of growth. We continue to be market leaders in our core franchise offerings, such as cash management.

Srinivasan Vaidyanathan: Thank you, Nirav. Good evening, and warm welcome to all the participants. Today we have with us our chairman, Mr. Keki Mistry, our CEO, Mr. Sashidhar Jagdishan, and our deputy managing director, Mr. Kaizad Bharucha. I will hand off for opening remarks to Sashi. Over to you, Sashi, then we can get on to the other questions.

Speaker #5: In the capital market segment, we continue to hold about 35% to 40% of the account settlements. In the bankruptcy issue, we hold about 40% to 50% of the escrow settlements.

Speaker #5: In the trade part of the business, almost 18 to 20 percent of the country’s exports go through us. In imports, 13 to 15 percent of the country’s exports go through us.

Sashidhar Jagdishan: Thank you, Srinivasan Vaidyanathan, and thank you all. Good afternoon to you, and welcome to the full year FY26 annual results call. Let me dive straight into the key aspects of FY26 performance. We had estimated the system credit growth to be around 10.5% to 11.5%. We did 12%, up from 5.5% last year. As you can see, there is positive momentum as we had expected. Deposit growth rate at 14.4% continues to grow faster than the credit growth, which is what we've always been doing. The growth rate is better than the system growth rate yet again. Net income growth clocked at 11%, similar to the last financial year, while EPS growth of 10% versus 3% last year. The yields on assets had a faster transmission as against deposits on a full year basis, leading to a NIM drop.

Speaker #5: In the cards, merchant acquiring—almost about 35 to 36 percent of acquiring—comes through the bank. On the issuance of credit cards, 21 to 22 percent of the issuances of the system is from us.

Speaker #5: In the spends, almost 26% to 28% of the card spends in the market is through our cards. We are a dominant salary relationship bank in the private sector.

Speaker #5: We are amongst the top two MSME banks in the country. Similarly, in mortgages, we are among the top two mortgage banks in the country.

Speaker #5: In the wheels business, whether it's auto or transportation, we're the top wheels bank in the country. The above, despite an intense competitive environment, reflects the excellence and execution capability of the bank.

Speaker #5: Our financial parameters reflect the strength and resilience of the bank. We have a strong capital position at 19.7 percent. Our asset quality is extremely healthy, with 1.15 percent growth in NPAs.

Sashidhar Jagdishan: Despite the drop in NIMS, the return on assets continued to be stable at 1.9% due to cost efficiencies, with cost to income declining from 40.5% to 39.5% on a core basis, and focus on quality growth reflecting in lower credit costs. I would like to remind you of the sizable investments we made over the last five to six years, which will bear fruit in the coming years. These investments were made despite our witnessing significant events such as COVID, a complex one, and one of the largest mergers in corporate history. The distribution nearly doubled to 9,700 branches. The number of customers nearly doubled to 100 million customers. Our tech investments more than quadrupled to around $1 billion. The merger with mortgage company HDFC Limited too is an investment for the future.

Speaker #5: This has been tested across three decades of business cycles. The bank has created a large provisioning buffer of almost 125 basis points to absorb any shocks in the future.

Speaker #5: While this is obviously contingent upon any future events that may occur in the future, we don't have any stress in our portfolio as we speak.

Speaker #5: Our focus is on profitability by pursuing growth opportunities. The loan-to-deposit ratio is not a constraint. The regulator has come out and talked about it.

Speaker #5: We have demonstrated our ability to gain market share on deposits every year—almost around 30 to 50 basis points over the last five years.

Speaker #5: Hence, it's no longer a binding constraint. We have been building a granular and sustainable deposit franchise, which is reflected thus. In the less-than-₹3 crore retail liabilities, we have moved up from 31 percent of the net total accretion to about 47 percent of the net deposit accretion for the year.

Sashidhar Jagdishan: The bank navigated the same in a stable manner over the last 3 years, despite changing economic outlook and regulatory stance. The above is going to provide a huge operating leverage in the future. Sometimes all of us have short memories and forget the core business foundation, which remains our moat and strength. Customers at 100 million, we continue to acquire about 6 to 8 million customers a year. This will be the funnel for future growth. 22% of our customers are actually 30 years of age, 42% are less than 40 years of age. This enables us an opportunity to engage through their life cycle, which would be the future engine of growth. We continue to be market leaders in our core franchise offerings, such as cash management. In the capital market segment, we continue to hold about 35% to 40% of the account settlements.

Speaker #5: This reflects a focus on granular and sustainable deposits. Having said that, the bank will continue to improve its quality of deposit franchise over the years to come.

Speaker #5: The bank witnessed an unprecedented event recently. But its strength and resilience were seen with stable and strong deposit flows. I would like to take this opportunity to thank the Government of India, the Reserve Bank of India, and SEBI for their unequivocal support during that period.

Speaker #5: However, the most important strength will be our leadership in the technology space. Over the past few years, we have focused on strengthening the bank's long-term competitive position, anchored heavily in our technology architecture, to operate as a technology-first institution.

Speaker #5: A large share of our investment has gone towards improving the digital front-end customer experience. We have been upgrading our interfaces and simplifying acquisition and service journeys, and modernizing our digital platform.

Sashidhar Jagdishan: In the bank issue, we hold about 40% to 50% of the escrow settlement. In the trade part of the business, almost 18% to 20% of the country exports go through us. In the imports, 13% to 15% of the country's imports go through us. In the card merchant acquiring, almost about 35% to 36% of acquiring comes through the bank. On the issuance of credit cards, 21% to 22% of the issuance of the system is from us. In the spends, almost 26% to 28% of the card spends in the market is through our cards. We are a dominant salary relationship bank in the private sector. We are among the top two MSME banks in the country. As in the mortgages, we are among the top two mortgage bank in the country.

Speaker #5: We launched in the year our new net banking, mobile banking platforms, and also our payment platform, which we probably did about a couple of years ago. All of them are at a population scale.

Speaker #5: Today, our mobile app serves over 60 million registered customer offerings. The features the USP of our build focuses on security, we have an OTP-less authentication, we have a lock which is for enhanced security, and we have a full-stack UPI-enabled wallet, which we call the Zap account, a combination of the above will make it extremely secure and probably one of the most secure offerings in the country today.

Speaker #5: The efforts have increased digital adoption to 97% for payments and service transactions, and 92% for acquisition journeys. Our goal remains simple: offer customers a seamless, reliable, friction-free experience across all touchpoints.

Sashidhar Jagdishan: In the wheels business, whether it's auto or transportation, we're the top wheels bank in the country. The above, despite intense competitive environment, reflects the excellence and execution capability of the bank. Our financials reflect strength and resilience of the bank. We have a strong capital position at 19.7%. Our asset quality is extremely healthy at 1.15% gross NPAs. This has been tested across three decades of business cycles. The bank has created a large provisioning buffer of almost 125 basis points to absorb any shock in the future. This is obviously contingent upon any future events that may occur in the future. We don't have any stress in our portfolio as we speak. Our focus is on profitability while pursuing growth opportunities. The loan deposit ratio is not a constraint. The regulator has come out and talked about it.

Speaker #5: The next layer after the customer layer is the intelligence layer. This is principally to build an AI-ready engine. We have built a strong intelligence layer that brings automation and analytics to the core of our operations.

Speaker #5: By decoupling our front-end and back-end through a modern API gateway and orchestration layer, we now have a strong foundation for the emerging agent-driven AI model.

Speaker #5: Strengthening AI is only as strong as its data. We have built a robust data foundation anchored by a customer-level, enterprise-level single source of truth from a customer perspective.

Speaker #5: We went live with our Lakehouse architecture, a centralized, scalable data lake with reusable, enriched data maps. While not always visible externally, this work is essential to long-term scalability and our AI aspirations.

Sashidhar Jagdishan: We have demonstrated our ability to gain market share on deposits every year, almost around 30 to 50 basis points over the last five years. Hence, it's no longer a binding constraint. We have been building granular and sustainable deposit franchise, which is reflected thus. In the less than three crore retail liabilities, we have moved up from 31% of the net total accretion to about 47% of the total net deposit accretion for the year. This reflects the focus on granular and sustainable deposits. Having said that, the bank will continue to improve its quality of deposit franchise over the years to come. The bank witnessed an unprecedented event recently, but its strength and resilience were seen with stable and strong deposit flows.

Speaker #5: But the big story is how we created, in-house, the unified AI platform, which is going to be the center that spans across the entire organization.

Speaker #5: It allows us to deploy AI agents quickly, without building custom interfaces between systems. The platform brings together enterprise search, document extraction, voice-based agents, and a full AI development lifecycle.

Speaker #5: It supposes multi-foundational and open models, and includes a unified evaluation model for strong governance, compliance, and security. We have an independent unit in the risk team that adds a second-line safeguard.

Sashidhar Jagdishan: I would like to take this opportunity to thank the Government of India, the Reserve Bank of India, and SEBI for their unequaled vocal support during that period. However, the most important strength will be our leadership in the technology space. Over the past few years, we have focused on strengthening the bank's long-term competitive position, anchored heavily in our technology architecture to operate as a technology-first institution. A large share of our investment has gone towards improving the digital front-end customer experience. We have been upgrading our interfaces, simplifying acquisition and service journeys, and modernizing our digital platform. We launched in the year our new net banking, mobile banking platforms, and also our payment platform, which we probably did it about a couple of years ago. All of them are at a population scale. Today, our mobile app serves over 16 million registered customers, offering.

Speaker #5: The key components include the model context protocol, or the agentic studio, an agentic mesh—these will enable us to deploy AI agents at scale, placing us amongst the small group of Indian and global banks with such advanced in-house capabilities.

Speaker #5: We already have five use cases in production and 14 more in development. We are focused on improving turnaround times, first-time ride outcomes, and freeing mid-office and back-office capacity for customer-facing roles.

Speaker #5: The above leadership position will enable us to harness efficiencies across the organization and will be a key driver to enhance return on asset over the next one, two, three years.

Speaker #5: The guiding principle is return on assets, loan growth, and deposit growth, and the quality of the balance sheet from a risk standpoint. All of it should culminate in consistent EPS growth.

Speaker #5: Let me also take on the subject matter relating to some of the matters that we witnessed during the quarter, including the resignation of the former part-time Chairman and the Dubai branch-related matter.

Sashidhar Jagdishan: The features, the USP of our build focuses on security. We have an OTP-less authentication, we have a lock, which is for enhanced security, and we have a full stack UPI-enabled wallet, which we call the Zap account. A combination of the above will make it extremely secure and probably one of the most secure offerings in the country today. The efforts have increased digital adoption to 97% for payments and service transactions, at 92% for acquisition journeys. Our goal remains simple. Offer customers a seamless, reliable, friction-free experience across all touch points. The next layer after the customer layer is the intelligence layer. This is principally to build an AI-ready engine. We have built a strong intelligence layer that brings automation and analytics to the core of our operations.

Speaker #5: I and the members of the Board did provide statements, both for the 18th March 2026 event. The Government of India, the Reserve Bank of India, and SEBI came out with statements in favor of the bank.

Speaker #5: The vehicle review, which is what we had committed at the time when we went to the press, is in process. As and when this happens, we shall provide a summary of the same.

Speaker #5: The audited financial statements of the bank for the year ended March 26th carry notes which are self-explanatory. On the Dubai branch-related matter, the same has been covered in the notes to accounts as well.

Speaker #5: There is also an NCDRC order which came out on the 23rd of March, which highlights that the complainants are not retail in nature, or are not uninformed investors, and they had a clear intent to pursue high-yield, high-risk investment products.

Sashidhar Jagdishan: By decoupling our front-end and back-end through a modern API gateway and orchestration layer, we now have a strong foundation for the emerging agent-driven AI model. Strengthening AI is only as strong as its data. We have built a robust data foundation anchored by a customer level, enterprise level, single source of truth from a customer perspective. We went live with our Lakehouse architecture, a centralized, scalable data lake, reusable, enriched data marts. While not always visible externally, this work is essential to our long-term scalability and AI aspiration. The big story is how we created in-house the unified AI platform, which is going to be the center that spans across the entire organization. It allows us to deploy AI agents quickly without building custom interfaces within systems. The platform brings together enterprise search, document extraction, voice-based agents, a full AI development life cycle.

Speaker #5: So, we do not have anything incremental other than the above. So we would like to pause here and probably take on questions from here.

Speaker #5: Thank you.

Speaker #1: Thank you, Sushi. Neerav, with that, we can open it up for questions. Please.

Speaker #3: Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their telephone.

Speaker #3: If you wish to remove yourself from the question queue, you may press star and one. Participants are requested to use handsets while asking a question.

Speaker #3: Ladies and gentlemen, we will wait for a moment while the question queue resumes. The first question is from the line of Maruka Janya from Tara Capital Partners.

Speaker #3: Please go ahead.

Speaker #4: Yeah, hi. I just have a few questions. Firstly, in terms of growth next year, what would be the key drivers? So, first of all, where do you see your growth possibly set above sector?

Sashidhar Jagdishan: It supports multi-foundational and open models and includes a unified evaluation model for strong governance, compliance, and security. We have an independent unit in the risk team that adds a second line safeguard. The key components includes the model context protocol or the agentic studio and agentic mesh. This will enable us to deploy AI agent to scale, placing us amongst a small group of Indian and global banks with such advanced in-house capabilities. We already have five use cases in production and 14 more in development, improving turnaround times, first time right outcome, and freeing mid-office and back office capacity for customer facing roles. The above leadership position will enable us to harness efficiencies across the organization and will be a key driver to enhance return on asset over the next one to three years.

Speaker #4: So, what could that be? What range could that be? And then, corporate growth has been a good driver, I guess, for everyone for the fourth quarter.

Speaker #4: And that's partly to do with yields as well. Do you see corporate growth sustaining, or do you see retail growth picking up from these levels?

Speaker #4: So that's my question.

Speaker #1: So, Maruka, Kaisa here. If I got your question as to what would be the growth drivers—first, on the corporate side, I think you would have seen in our release the increase that we have done over the previous year.

Speaker #1: We do see this sustaining. As there has been demand, of course, we will have to temper it given the fallout of what we see in the geopolitical area, which hopefully should not be more than a couple of months going into this financial year.

Sashidhar Jagdishan: The guiding principle is return on assets, loan growth, and deposit growth, and quality of the balance sheet from a risk standpoint. All of it should culminate in a consistent EPS growth. Let me also take on the subject matter relating to some of the matters that we witnessed during the quarter, including the resignation of the former part-time chairman and the Dubai branch related matter. I and the members of the board did provide statements post the 18 March 2026 event. The Government of India, the Reserve Bank of India, and SEBI came out with statements in favor of the bank. The legal review, which is what we had committed at the time when we went to the press, is in process. As and when this happens, we shall provide a summary of the same.

Speaker #1: But we do see an opportunity in corporate, across sectors in electronics, food processing, auto, auto ancillaries, the renewable sector, and semiconductors. Also, it opens up, as you well know and are aware, the different opportunities which are now available from an acquisition financing point of view, including what was already there from project finance and supply chain.

Speaker #1: So we see the corporate sector, the emerging corporates, and corporates holding up in the year ahead. Coming to your point on retail growth, Maruka, if you really see, our retail growth has certainly stepped up from where we were last year.

Sashidhar Jagdishan: The audited financial statements of the bank for the year ended 31 March 2024 carry notes which are self-explanatory. On the Dubai branch related matter, the same has been covered in the notes to accounts as well. There is also an NCDRC order which came out on 23 March 2024, which highlights that the complainants are not retail in nature or are not uninformed investors, and they had a clear intent to pursue high yield, high risk investment products. We do not have anything incremental other than the above. We would like to pause out here and probably take on questions from here. Thank you.

Speaker #1: And we have seen a better step-up, if you followed our results, in the last three quarters. And this step-up has been there across our wheels business, as well as on the personal loan and business loan side.

Speaker #1: To add to that, we've also seen consistent holding of demand on the mortgage book, and that has also performed well. So, we've seen growth overall. If you look at it, or if you look at the balance sheet, we've been about 53-54 percent in the retail, and the balance coming out of wholesale.

Srinivasan Vaidyanathan: Thank you, Shashi. With that, we can open it up for questions, please.

Operator 2: Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue opens. The first question is from the line of Mahrukh Adajania from Nuvama Wealth Management. Please go ahead.

Speaker #4: Got it. So what kind of growth trajectory should we look at for FY27? Because I guess the earlier guidance was of above-sector growth, but the sector growth has also moved up substantially.

Speaker #1: Yeah, so Maruka, if you really see, our loan growth last year was 5%, and our loan growth this year is 12%. Right? So I think we will continue to have good momentum and trajectory in our growth.

Speaker #1: But you have to keep in mind what the geopolitical situation is and what that fallout is going to be. But we are confident that we see the positivity continuing.

Mahrukh Adajania: Yeah, hi. I just have a few questions. Firstly, that in terms of growth next year, right? What would be the key driver? So first of all, where do you see your growth rate set, possibly above sector? So what could that be? What range could that be? And then corporate growth has been a good driver, I guess, for everyone for Q4. And that's partly to do with yield as well. Do you see corporate growth sustaining or do you see retail growth picking up from these levels? So that's my question.

Speaker #1: We've not seen any alarm bells go up as yet, and therefore, we will continue to focus on all these areas that I covered earlier.

Speaker #3: Thank you. Maruka, I request to come back for a follow-up question. Thank you. I request all participants to kindly limit yourself to two questions per participant, and please join the queue for a follow-up question.

Speaker #3: Next question is from the line of Nathan Agarwal from Motilal Oswal. Please go ahead.

Sashidhar Jagdishan: Maru, Kaizad here. If I got your question as to what would be the growth drivers, first on the corporate side, I think you would have seen in our release the increase that we have done over the previous year. We do see this sustaining as there has been demand. Of course, we will have to temper it given the fallout of what we see in the geopolitical area, which hopefully should not be more than a couple of months going into this financial year. We do see an opportunity in corporate across sectors, in electronics, food processing, auto ancillaries, the renewable sector, and the semiconductors. Also, it opens up, as you well know and are aware of the different opportunities which are now available from an acquisition financing point of view, including what was already there from a project finance, and supply chain.

Speaker #5: Yeah, hi. Good evening. Am I audible?

Speaker #1: Yes, Nathan.

Speaker #5: Hi. Am I audible?

Speaker #1: Yes. Yes, Nathan. Go ahead. Yeah.

Speaker #3: Yes, Nathan. You're audible. Please go ahead.

Speaker #5: Okay, great. So firstly, congrats on a good quarter and a very challenging environment. And so my question is two questions. Firstly, on the deposits.

Speaker #5: So how do you look at the deposit market share? We have done very well in this quarter. And if I look at it in context to how the system itself has done, we have seen a very sharp pickup in that deposit accretion for the system overall.

Speaker #5: So how do you kind of look at the market share that HDFC Bank has been able to garner this quarter in context of system numbers?

Speaker #5: And any color, if you can, also share on what has driven this huge surge in the business numbers over the last fortnight.

Speaker #1: Okay. Let me take that, if that's okay. See, if you look at the quarter, the ₹2.45 lakh crore of deposits that came in—typically, you see that the market is pretty active and accretes maximum, almost more than half, close to half or slightly above half of what the year accretes in the last quarter.

Sashidhar Jagdishan: We see the corporate sector, the emerging corporates, holding up in the year ahead. Coming to your point on retail growth, Maru, if you really see our retail growth has certainly stepped up from where we were last year, and we have seen a better step up if you've followed our results in the last three quarters.

Speaker #1: In this year, it's no exception. If anything, it has been more squeezed towards the last month of the quarter rather than the full quarter, because January was still tight all across.

Srinivasan Vaidyanathan: This step-up has been there across our wholesale business, as well as on the personal loan, business loan side. To add to that, we've also seen consistent strong demand on the mortgage book, and that has also performed well. We've seen a growth overall, if you look at it or if you look at the balance sheet, we've been about 53%, 54% in the retail and the balance coming out of wholesale.

Speaker #1: Somewhere from the later part of February to March, it has been quite easy and liquid, and the possibility of deposit gathering is there. If you look at the composition, so that's one.

Speaker #1: The market is a there is a market tailwind that is there. I think the system growth has as we saw somewhere reported a couple of days ago was about an aggregate level, 11 and a half percent or so.

Speaker #1: System type of growth. Now, when you look at the composition of the deposits between retail and wholesale, there is some level of wholesale deposits that come in the March quarter.

Mahrukh Adajania: Got it. What kind of growth trajectory should we look at for FY27? Because I guess the earlier guidance was of about sector growth, but the sector growth has also moved up substantially.

Speaker #1: Naturally, because of relationships as well as how the corporates manage their balance sheets towards the end of their financial year. And you'll see that the average of the retail versus wholesale is about a percentage point or two different in this quarter, which, in our earnings check, you'll notice that there is a two against 84 or something, 82, 83 against 84.

Srinivasan Vaidyanathan: Yeah. Mahrukh Adajania, if you really see our loan growth last year was 5%, and our loan growth this year is 12%. I think we will continue to have a good momentum and trajectory in our growth, but you have to keep in mind what the geopolitical situation and that fallout is going to be. We are confident that we see the positivity continuing. We've not seen any alarm bells go up as yet, and therefore, we will continue to focus on all these areas that I covered earlier.

Speaker #1: So, retail—I'm talking about the retail—so retail continues to power and stays ahead of the 80% mark. And within that, when we look at the composition of the deposits between the core retail—when I say core retail, I mean the higher ticket price NRIs or certain other institutions that are managed through the branches, and so on.

Speaker #1: When you look at it, the core retail is faster and almost close to the total, despite there is a good power coming from the wholesale business.

Operator 2: Thank you. Mahrukh Adajania, can I request you to come back for a follow-up question? Thank you. I request all the participants, kindly limit yourself to two questions per participant, and rejoin the queue for a follow-up question. Next question is from the line of Nitin Aggarwal from Motilal Oswal. Please go ahead.

Speaker #1: But there is a retail core; retail is also almost at that level. So we feel quite enthused by the Relationship Managers gathering and engaging to get these things done.

Speaker #1: So, we are quite positioned for continued growth in this area.

Speaker #5: Right. And Sunil, also, the other part of the question is—any color, if you can share, on what has driven this huge surge in the business numbers?

Nitin Aggarwal: Hi. Good evening. Am I audible?

Srinivasan Vaidyanathan: Yes, Nitin.

Speaker #5: Over the last fortnight of the year—I mean, this time, the pickup is exceptionally strong across the system.

Nitin Aggarwal: Hi, am I audible?

Srinivasan Vaidyanathan: Yes, Nitin, go ahead. Yeah.

Operator 2: Yes, Nitin, you're audible. Please go ahead.

Speaker #1: Yeah, look, yes. If you look at it—yeah, the liquidity—look at the system, what kind of funds that have been available in the system.

Nitin Aggarwal: Okay, great. Firstly, congrats on a good quarter in a very challenging environment. My question is like two questions. Firstly, on the deposits, so how do you look at the deposit market share? We have done very well in this quarter, but if I look at it in context of how the system itself has done, we have seen a very sharp pickup in the deposit accretion for the system overall. How do you kind of look at the market share that HDFC Bank has been able to garner this quarter in context with system number? Any color, if you can also share on what has driven this huge surge in the business numbers over the last fortnight.

Speaker #1: I think the last time we did quite a significant volume was like ₹175,000 or ₹180,000 crore or something like that. And this year, given that we have added much more customers and much more distribution strength and more stronger corporate relationships—because we've been lending this year.

Speaker #1: Remember that? We have grown corporate loans to 13%. So we get a higher level of share from each one of them.

Speaker #3: Thank you. Nathan, I request to come back for a follow-up question. Next question is from the line of Kunal Shah from Citi Group. Please go ahead.

Srinivasan Vaidyanathan: Okay. Let me take that if that's okay. See, if you look at Q4, the INR 2.45 lakh crores of deposits that came in. Typically, you see that the market is pretty active and accretes maximum, almost more than half, close to half or slightly above half of what the year accretes in Q4. In this year, it's no exception. If anything, it has been more squeezed towards the last month of the quarter rather than the full quarter, because January was still tight all across. Somewhere from later part of February to March, it has been quite easy and liquid, and possibility of deposit gathering is there. If you look at the composition, so that's one. There's a market tailwind that is there.

Speaker #6: Hi. Thanks for taking the question. So, firstly, again, touching upon the growth side, we indicated we will try to grow in line with the industry average.

Speaker #6: But we are seeing the industry average being upwards of 15. We are still at 12, so we have been below it. And next year, would we retain the guidance of growing above the industry average, or would we say we will still grow in line with the industry average because the industry average itself has picked up to a very large extent?

Speaker #6: And on the deposits, how much of this is the transitory nature, and how much of this can be sustained? Because last year, we indicated that we will focus more on the sustainable deposits, even during the period end.

Srinivasan Vaidyanathan: I think the system growth, as we saw somewhere reported a couple of days ago, was about at an aggregate level 11.5% or so system type of growth. Now, when you look at the composition of the deposits between retail and wholesale, there is some level of wholesale deposits that come in Q4, naturally because of relationships as well as how the corporates manage their balance sheets towards the end of their financial year. You'll see that the average of the retail versus wholesale is about a percentage point or two different in this quarter, which in our own instinct you'll notice that there is a 82 against 84 or something, 82, 83 against 84. Retail, I'm talking about the retail. Retail continues to power and stays ahead of the 80% mark.

Speaker #6: So, just want to get the sense because the difference between the end-of-period and average deposit is quite high during this quarter.

Speaker #5: Okay. Let me take one by one. The first one is on the growth in the system. At least if you see through a large part of FY26, the nominal GDP growth that was expected was somewhere around 9%, 9.5%.

Speaker #5: So one consensus until a large part of the year was a system credit growth of around 10 and a half to 11 and a half percent.

Speaker #5: This is what we had expected, and we calibrated our strategies and our growth in line with that. That is why we grew at 12%.

Srinivasan Vaidyanathan: Within that, when we look at the composition of the deposits between the core retail, when I say core retail, I mean the higher-ticket size NRIs or some other institutions that are managed through the branches and so on. When you look at it, the core retail is faster and almost close to the total, despite there is a good portion coming from the wholesale business, but there is the retail. Core retail is also almost at that level. We feel quite enthused by the relationship managers gathering and engaging to get these things done. We are quite positioned for continued growth on this area.

Speaker #5: The system you have said 16 or 15%, but actually, when you compare the period end numbers as of 31st March, which is published by the Reserve Bank of India and you which and you sort of make the math, it comes to somewhere around the 13 and a half to 13.9%.

Speaker #5: That's the system growth. Obviously, it has been faster. It is something that we have to navigate, but it's not too far away from the momentum we have seen—from a 5.4% growth in FY25 to a 12% growth.

Speaker #5: So I think, as Kaizad was mentioning, we are very well positioned to continue that kind of momentum in a manner that we are responsive.

Nitin Aggarwal: Right. Actually, also the other part of the question is any color if you can share on what has driven this huge surge in the business numbers over the last fortnight of the year? I mean, this kind of pickup is exceptionally strong across the system.

Speaker #5: We do responsible growth. And we don't want to overstretch beyond what could potentially have some landmines in the future. So that's the reason why we are not, sort of, because of this dichotomy in terms of the growth being slightly more than what one expected in relation to the nominal GDP growth, I think we would like to just leave it at that to say that our trajectory is in the right direction.

Srinivasan Vaidyanathan: Yeah. Look. If you look at it, you are right. If you look at the system, what kind of funds that have been available in the system, I think the last time we did quite a significant volume was like INR 1.75 lakh crore or INR 1.80 lakh crore or something like that. This year, given that we have added much more customers, much more distribution strength, and more stronger corporate relationships because we've been lending this year. Remember that we have grown corporate loans to 13%. We get the higher levels of share from each one of them.

Speaker #5: And we will do what is appropriate from our risk and reward perspective. That's part one. Part two, on the—what was the second question on the?

Speaker #5: On the deposits, let me first take the granularity of deposits. The retail, as a proportion of total deposits, has always been about 80 to 85 percent of the total bank's deposits.

Operator 2: Thank you. Nitin, I'll request you to come back for a follow-up question. Next question is from Kunal Shah from Citigroup. Please go ahead.

Kunal Shah: Hi. Sorry for repeating the question. Firstly, again, touching upon on the growth side, we indicated that we will try to grow at in line with the industry average, but we are seeing industry average being upwards of 15, we are still at 12. We have been below it. Next year, would we retain the guidance of growing above the industry average? Or would we say we will still grow in line with the industry average because industry average itself has picked up to a very large extent. On the deposits, how much of this is the transitory nature and how much of this it can sustain? Because last year we indicated that we will more focus on the sustainable deposits even during the period end.

Speaker #5: You have three significant verticals where we have a lot of close relationships, whether it's corporate banking or whether it is the capital market segment as well.

Speaker #5: Now, let's talk about the 80–85 percent, which is the retail segment. Within that, there is definitely a focus on trying to see how we can garner more granular time deposits.

Speaker #5: If you see, as I mentioned in my opening remarks, the granularity of the deposits has stepped up significantly. In fact, the less-than-₹3 crore deposits that have been mobilized in 2026, on a net basis, have grown almost about 74% over the net incremental deposits for FY25 in that less-than-₹3 crore bucket.

Kunal Shah: Just want to get the sense because the difference between the end of period and average deposit is quite high during this quarter.

Speaker #5: So what constituted 31% of the total net accretion in FY25 now constitutes 47%. It's a very significant number because these are all very less volatile and very sustainable.

Sashidhar Jagdishan: Okay. Let me take one by one. The first one is on the growth in the system. At least if you see through large part of FY26, the nominal GDP growth was expected somewhere around the 9.5%. One consensus until a large part of the year was a system credit growth of around 10.5% to 11.5%. This is what we had expected, and we calibrated our strategies and our growth in line with that, and that is why we grew at 12%. The system, you have said 16% or 15%, but actually when you compare the period end numbers as of 31 March, which is published by the Reserve Bank of India and you sort of make the math, it comes to somewhere around the 13.5% to 13.9%.

Speaker #5: And that is the that is something that we are emphasizing as we move ahead. And this should this particular number should go up even in the future.

Speaker #5: So, 50% or less are three-core? 47% is less than three-core, on the time deposits, on incremental—on the incremental, of the incremental. So, if we have mobilized ₹3.9 lakh crore for the full year, 47% is that.

Speaker #5: Now, in terms of the volatile or the high-frequency deposits, it's quite natural—when you have corporate as a significant part of a corporate and capital markets, which contribute 55% or 53% of the balance sheet—you will have large relationships which you need to patronize.

Sashidhar Jagdishan: That's the system growth. Obviously, it has been faster. It is something that we have to navigate, but it's not too far away from the momentum we have seen from a 5.4% growth in FY25 to a 12% growth. I think we, as Kaizad was mentioning, are very well-positioned to continue that kind of a momentum in a manner that we do responsible growth, and we don't want to overstretch beyond what could potentially have some landmines in future. That's the reason why we're not sort of...

Speaker #5: And that aspect of the 15% of the total deposits will be volatile in nature. You will see that moving out and probably coming back during every month-end or quarter-end as well.

Speaker #5: But the end of it is to try and see how, on a full-year basis, we try and inch upwards the net incremental mobilization, and that is what we are all working towards.

Speaker #5: So that gives the confidence on LCR at 114-odd percent, because now we are below 115. So, how would we look at LCR? Because now LDR is not in focus, but obviously, you would want to manage LCR.

Sashidhar Jagdishan: Because of this dichotomy in terms of the growth being slightly more than what one expected in relation to the nominal GDP growth, I think we would like to sort of just leave it at that to say that our trajectory is in the right direction and we will do what is appropriate from our risk and reward perspective. That's part one. Part two on the, what was the second question on the?

Speaker #5: So, what range would we want to sustain the LCR in?

Speaker #6: Kunal, in the past, we have mentioned that our endeavor for LCR is to be between 110 and 120. We are somewhere in the middle.

Speaker #6: Last quarter, I think we were about 116. Now we're 114. So thereabouts, that's the kind of range at which we intend to operate—to be in the middle.

Speaker #6: Sometimes it goes higher. Sometimes it comes below. But somewhere in the middle is where we endeavor.

Operator 2: On the deposits.

Sashidhar Jagdishan: On the deposits. Let me first take the granularity of deposits. The retail has always been, as a proportion of total deposits, has been about 80% to 85% of the total bank's deposits. You have three significant verticals where we have a lot of close relationship being, even whether it's corporate banking or whether it is the capital market segment as well. Now let's talk about the 80% to 85%, which is the retail segment. Within that, there is definitely a focus on trying to see how we can garner more granular time deposits. If you see, as I mentioned in my opening remarks, the granularity of the deposits has stepped up significantly.

Speaker #5: Got it. Thank you. Yeah.

Speaker #7: Thank you. Next question is from the line of Pranav from Bernstein. Please go ahead.

Speaker #8: Hi, thanks for taking my questions. My first question is more on guidance. I think, if I heard you right, you said LDR is no longer kind of relevant, more of a constraint.

Speaker #8: And I also heard you saying that for loan growth, you would rather focus on improving momentum rather than benchmarking the system. So is there one metric that you use internally to assess performance, which kind of captures some of these pushes and pulls you have on the different metrics?

Speaker #8: That would also be helpful for, I guess, going to track performance. That's the first question. And second question is on your NIMs. The borrowings have come up almost 11% year-on-year.

Sashidhar Jagdishan: In fact, the less than 3 crore deposits have grown, which has been mobilized in 2026 on a net basis, has grown up almost about 74% over the net incremental deposits for FY25 on that less than 3 crore bucket. What constituted 31% of the total net accretion in FY25 now constitutes 47%. It's a very significant number because these are all very less volatile and very sustainable, and that is something that we are emphasizing as we move ahead, and this particular number should go up even in future. As regards the-

Speaker #8: But the NIMS trajectory is broadly similar to what some of your peers have reported. So, is that something you expected a year back? Meaning, borrowings come up, but NIMS doesn't really get impacted?

Speaker #8: Or has something changed in the effort? And more importantly, will a reduction in borrowings have a meaningful impact on NIMs going forward? Is that even a lever that you are thinking about?

Speaker #8: Those are my questions. Thank you.

Speaker #6: So let me talk about what you ascribe to the borrowings mix changing. But yes, changing of the borrowings mix is a favorable item.

Speaker #6: Where costs that are higher—essentially the spreads that you pay—you can save on that and get to the bottom. However, if you see what has happened, the rate cycle, when you go back about a year, when you were in March, April of last year, the rate hiking cycle had just started in February.

Kunal Shah: Sir, 47% is less than INR 3 crore?

Sashidhar Jagdishan: Yeah. On the time deposits.

Kunal Shah: On incremental.

Sashidhar Jagdishan: Of the incremental.

Kunal Shah: Got it.

Sashidhar Jagdishan: If we have mobilized INR 3.9 lakh crores for the full year, 47% is that. Now, in terms of the volatile or the high frequency deposits, it's quite natural when you have corporate as a significant part of our corporate and capital markets, which contribute 55% or 53% of the balance sheet, you will have large relationship which you need to patronize. That aspect of the 15% of the total deposits will be volatile in nature. You will see that moving out and probably coming back during every month end or quarter end as well. The endeavor is to try and see how, on a full year basis, we try and inch upwards the net incremental mobilization, and that is what we are all working towards.

Speaker #6: And there was no kind of an indication that it would end up 125 basis points in the cycle so far.

Speaker #8: Rate reduction.

Speaker #6: Rate reduction. Has not hiked. The reduction—rate reduction cycle—125 basis points. Was not something that was anticipated last March, last April. And when that happens, and a little about 70% of the loans are floating rate and immediately the transmission takes place, depositors is managed.

Speaker #6: And so, within the deposit, when there is a higher propensity for time deposits, which we are seeing, the time deposit rate of growth was 15.5% year on year when you see now.

Speaker #6: When the total deposit rate of growth was 14.4%, the time deposit was 15.5%. And so this is a higher propensity towards the time deposit, which is again, on a relative basis, higher priced than the cut-off, of course.

Kunal Shah: That gives the confidence on LCR at 114-odd% because now we are below 115%. How would we look at LCR? Because now LDR is not in focus, but obviously you'd want to manage LCR. What range we would want to sustain the LCR below?

Speaker #6: And so, that is where it is sitting. And it needs to unlock itself, both from how the rate cycle plays out, as well as how the mix of the deposits change.

Srinivasan Vaidyanathan: Kunal, in the past, we have mentioned that our endeavor for LCR is to be between 110 and 120. We are somewhere in the middle. Last quarter, I think we were about 116, now we are 114. Thereabout is the kind of range at which we intend to operate, to be in the middle. Sometimes it goes higher, sometimes it comes below, but somewhere in the middle is where we endeavor.

Speaker #6: So essentially, it is marked from one type of funding, which is borrowing, into another type of funding, which also in the funding stack itself has higher order than the cut-off.

Speaker #6: And so that is where it is going to be. And still yet to unlock fully. So that's on the borrowings and where it is.

Speaker #6: On the question of the NIMS, I think we talked about how to think about NIMS, which is: see the policy rate when it started to come down, the assets came down faster and more or less fully there.

Kunal Shah: Got it. Thank you. Yeah.

Operator 2: Thank you. Next question is from the line of Pranav from Bernstein. Please go ahead.

Speaker #6: The deposit has moved. The pricing on the deposit, if you look at the transmission that has happened, is only about 40 to 50 basis points that has come into that so far.

Pranav Gundlapalle: Hi. Thank you for taking my questions. My first question, Mr. Vaidyanathan, is more on guidance. I think if I heard you right, you said LDR is no longer kind of relevant or a constraint. I also heard you saying that loan growth, you would rather focus on improving momentum rather than benchmarking the system. Is there one metric that you use internally to assess performance which kind of captures some of these pushes and pulls you have on the different metrics? That would also be helpful for, I guess, going just to track performance. That's the first question. Second question is on your NIMs. The borrowings have come up almost 11% year on year, but the NIM trajectory is broadly similar to what some of your peers have reported.

Speaker #6: So, it's not fully compensated for what we—asset pricing has moved down. So, and as we see now, due to the geopolitical situation and uncertainty that is there, the rate cycle is currently paused.

Speaker #6: If anything, the tendency—at least we are seeing from the securities market—is that the rates have gone up a bit, right? And so, while we don't want to hazard, I guess, whether the rate reduction cycle is done and it's bottomed and now it's going to start going up, I don't want to hazard.

Speaker #6: But at least, by all indications, looking at the securities market, it seems to be going up. It depends on how the geopolitical situation settles, and so thereby countries' liquidity and borrowing needs, depending on how the oil prices settle, will determine.

Pranav Gundlapalle: Is that something you expected a year back, meaning borrowings comes up but NIM doesn't really get impacted? Has something changed in there? More importantly, will a reduction in borrowings have a meaningful impact on NIM, going forward? Is that even a lever that you are thinking about? Those are my two questions. Thank you.

Speaker #6: Our trajectory of the NIMs. But then more important, I think what Rishi alluded to in his preamble, in his opening remarks, is that what we are focused more on than the NIMs is on the returns.

Srinivasan Vaidyanathan: Let me talk about what you ascribed to the borrowings mix changing. Yes, changing of the borrowings mix is a favorable item where costs that are higher, essentially the spreads that you pay, you can save on that and get to the bottom. However, if you see what has happened, the rate cycle, when you go back about a year, when we were in March, April of last year, the rate hiking cycle had just started in February, and there was no kind of an indication that it would end up 125 basis points in the cycle so far.

Speaker #6: And when any of those on the NIMs that we manage as best as we could, given the market environment, we do have those levers of enhancing our efficiency, both from an operating side as well as from the credit side, to realize.

Speaker #6: And that is what, in recent time periods, you have seen. Where, when the NIMS has been in a small range—bound minus or plus, the offsets have come from these to keep the returns stable in that range.

Speaker #6: And the quarter was 1.96, but the year was 1.94. Similar to the full year that you saw last year, on the return on asset.

Speaker #9: Understood. See, if I may just ask a follow-up. My question is more on the letters. So, hypothetically, if, let's say, borrowings would decline by 75%, right?

Sashidhar Jagdishan: Rate reduction.

Srinivasan Vaidyanathan: Rate reduction. Not hiking, the reduction. Rate reduction cycle, 125 basis points, was not something that was anticipated last March, last April. When that happens, a little above 70% of the loans are floating rate and immediately the transmission takes place, deposit, as you know, is managed. Within the deposit, when there is a higher propensity for time deposit, which we have seen, the time deposit rate of growth was 15.5% year on year, which you see now. When the total deposit rate of growth was 14.4%, the time deposit was 15.5%. There's a higher propensity towards the time deposit, which is again, on a relative basis, higher priced than the CASA, of course.

Speaker #9: So, let's say your borrowings just come off to 6 or 7 percent of liabilities. Today, do you think NIMs will improve very significantly?

Speaker #6: Yeah. If all else remains the same—that means no other factors come into play—borrowing percentage coming down will change the NIMs trajectory upwards. And all else from the other side also remaining the same will boost the returns.

Speaker #9: Okay, got it. On the first question, on the metric, I think I heard you say that you focus more on returns rather than NIMS.

Speaker #9: So, is some version of TPOP the metric that would be appropriate? So, what would be the best metric then?

Srinivasan Vaidyanathan: That is where it is sitting, and it needs to unlock itself both from a how the rate setting plays out as well as how the mix of the deposits change. Essentially, it is marked from one type of funding, which is borrowing, into another type of funding, which also in the funding stack is of a higher order than the CASA. That is where it is going to be and still needs to unlock fully. That's on the borrowings and where it is. On the question of the NIM, I think we talked about how to think about NIM, which is, see the policy rate, when it started to come down, the assets came down faster and more or less fully there. The deposit has moved.

Speaker #6: ROA is what we should focus on. TPOP is an intermediate, right? I mean, you take higher risk and give and take it in the top line.

Speaker #6: You do it away in the credit cost below the TPOP. But TPOP doesn't determine what returns you can get. So we focus on the returns on asset.

Speaker #9: Okay. But that doesn't capture growth, right? I mean,

Speaker #6: Yeah, at the growth rate, the profit growth and returns, and EPS. Top-line growth and returns. And.

Speaker #8: And combination EPS.

Speaker #6: EPS. That's what you alluded to.

Speaker #9: Understood. Thank you. Thank you.

Speaker #6: Thank you. Thank you.

Speaker #9: Thank you. Next question is from the line of Sheshadri Singh from NT Global. Please go ahead. Sheshadri, can I request you to unmute your line and proceed with your question?

Srinivasan Vaidyanathan: The pricing on the deposit, if you look at the transmission that has happened, it's only about 40 to 50 basis points has come in into that so far. It's not fully compensated for what the asset pricing has moved down. As we see now due to the geopolitical situation and uncertainty that is there, the rate cycle is currently paused. If anything, the tendency, at least we are seeing from the securities market, is that the rates have gone up a bit, right? While we don't want to hazard a guess whether the rate reduction cycle is done and it's bottomed and now it's going to start going up, I don't want to hazard, but at least by all indications, looking at the securities market, it seems to be going up.

Speaker #10: Can you hear me? No audible?

Speaker #9: Yes.

Speaker #10: Yes, Sheshadri. Hi. Thank you for the opportunity. Two questions. One is, I was hearing Shashi with interest in terms of the investments that are being made in the last five years.

Speaker #10: Are we now entering a cycle where the post-income ratio has peaked, and we can expect significant benefits to come through? I know part of it will come from revenue growth itself, because loan growth is bouncing back.

Speaker #10: This should be a better year for margins, etc. But on the OPEX side, is there a possibility that the overall OPEX could slow down from here, because a large part of these investments that you made are done?

Srinivasan Vaidyanathan: Depends on how the geopolitical situation settles, and so thereby, countries' liquidity and borrowing needs, depending on how the oil prices settle, will determine our trajectory of the NIM. More important, I think what Sashi alluded to in his preamble, in his opening remarks is that what we are focused more than on the NIM is on the returns.

Speaker #10: Or do you think this is an ongoing process and there aren’t too many levers?

Speaker #6: Yeah, Sheshadri, yes. If you look at the cost growth that we have, we have seen that at a level almost at, call it, 6.5%, 7% or so as the full year, right?

Srinivasan Vaidyanathan: When we may have those on the NIM that we manage as best as we could, given the market environment, we do have those levers of enhancing our efficiency both from an operating side as well as from the credit side to realize, and that is what in the recent time periods you have seen, wherein the NIM has been in a small range bound, minus or plus. The offsets will come from these to keep that return stable in that range, and the quarter was 1.96, but the year was 1.94, similar to the full year that you saw last year on the return on assets.

Speaker #6: Quarter-to-quarter variation happened, but full year, call it 6.5–7 percent rate of growth. It's lower than the top-line growth, and we are seeing that benefit coming in.

Speaker #6: Having said that, the cost-to-income is a relative ratio, as you know, as you also just alluded to. Even the top line moves faster.

Speaker #6: You get that relative ratio. But more important is also to look at cost to assets. Cost to assets is at about 1.9% or so.

Pranav Gundlapalle: Understood. Vijay, if I may just ask a follow-up. My question is more on ratios. Hypothetically, if, let's say, borrowings would decline by 75%, right? Let's say your borrowings just come off to 6 or 7% of liabilities today. Do you think NIM will improve very significantly?

Speaker #6: We do think that the cost to assets at 1.9 is best in class. But, however, we do see that there is an opportunity space even in that aspect of it due to various technology implementations.

Speaker #10: Which is what I mentioned, Sheshadri, that if we just focus on the investments that we made in technology and implement them across the organization, you should see operating leverage kicking in and enhancing your ROAs.

Srinivasan Vaidyanathan: Yes. If all else remaining same, that means no other factors play in. Borrowing percentage coming down will change the NIM trajectory upwards, and all else on the other side also remaining same will boost the returns.

Speaker #10: The second question is on retail loan growth. You've done well in terms of recovering the overall loan growth. But retail still, I think, it's in the single digits.

Pranav Gundlapalle: Okay, got it. On the first questions on the metric, I think I heard you say that you focus more on returns rather than just NIM. Is some version of PPOP the metric that would be appropriate? What would be the best metric then?

Speaker #10: I think there is some upside for a franchise like yours. Going forward, what would be the levers to accelerate retail loan growth? Which products? Which channels?

Speaker #10: More harvesting of cross-selling within your existing customer base? Should we expect some forward momentum in that part of the business in the coming FY27, early in the year?

Srinivasan Vaidyanathan: ROA is what we should focus on. PPOP is an intermediate, right? You take higher risks and take it in the top line. You do it away on the credit cards below the PPOP. PPOP doesn't determine what returns you can get, so we focus on the return on assets.

Speaker #10: And would it be back-ended or front-ended? So I think I did cover it in my opening response to Maruk. We have seen good traction across our products in wheels, personal loans, as well as in the mortgages space.

Pranav Gundlapalle: Okay. That doesn't capture growth, right?

Srinivasan Vaidyanathan: Yeah. I'd say growth rate is for profit growth and returns.

Pranav Gundlapalle: Top line growth.

Srinivasan Vaidyanathan: Top-line growth and returns.

Pranav Gundlapalle: It culminates in an EPS.

Speaker #10: Over the last three quarters, sequentially. And in terms of levers today, if I just take mortgages, we were doing mortgages earlier out of about 6,800 locations.

Srinivasan Vaidyanathan: EPS. That's what we are looking to.

Pranav Gundlapalle: Okay. Understood. Thank you, sir.

Srinivasan Vaidyanathan: Thank you.

Operator 2: Thank you. Next question is from the line of Seshadri Sen from Emkay Global. Please go ahead. Seshadri, can I request you unmute your line and proceed with your question?

Speaker #10: We are now covering mortgages for more than 7,800 locations, closer to 8,000. So, one is we are using distribution. Two is we've got our digital channels working very well.

Seshadri Sen: Sir, can you hear me?

Operator 2: Yes, go ahead.

Seshadri Sen: Am I audible?

Operator 2: Yes.

Srinivasan Vaidyanathan: Yes, Seshadri.

Speaker #10: And we have seen a higher utilization of our 10-second loans, both in our express loans and auto loans and personal loans. We've also seen more addition to the customer acquisition base—that is what Shashi referred to earlier.

Seshadri Sen: Hi. Thank you for the opportunity. Two questions. One is, I was hearing Sashidhar Jagdishan with interest in terms of the investments that has been made in the last five years. Are we now entering a cycle where the cost-income ratio has peaked and we can expect significant benefits to come through? I know part of it will come from revenue growth itself because loan growth is bouncing back. This should be a better year for margins, et cetera. On the OpEx side, is there a possibility that the overall OpEx could slow down from here because a large part of these investments that you made are done? Or do you think this is an ongoing process and there's not too many levers?

Speaker #10: As well as the foray that we have done in the salary accounts. And these salary accounts create the base for us for better cross-sell and penetration of our retail products.

Speaker #10: And we are the leading bank in salary accounts and the quality of the franchise we have out over there. So if you look at our physical distribution of branches, if you look at the better penetration and utilization of our digital channels, as well as you look at the increasing acquisition that we have in what we call our pre-approved base—because we have the history of the client, because of the salary relationship—has obviously created the momentum.

Srinivasan Vaidyanathan: Yeah. Seshadri, yes. If you look at the cost growth that we have, we have seen that at a level almost at, call it, 6.5, 7% or so is the full year, right? Quarter to quarter variations happen, but full year, call it, 6.5, 7% rate of growth is lower than the top line growth, and we are seeing that benefit coming in. Having said that, the cost to income is a relative ratio, as you know, as you also just alluded to. Even the top line moves faster, you get that relative ratio. More important is also to look at cost to assets. Cost to assets is at about 1.9 or so. We do think that the cost to assets at 1.9 is best in class.

Speaker #10: Without going down the asset quality ladder, yeah. And okay, I'm being prompted by Shashi on a very important metric. We have seen our disbursals go up quarter on quarter.

Srinivasan Vaidyanathan: However, we do see that there is an opportunity space even in that aspect of it due to various technology innovations. Which is what I mentioned, Seshadri, that if we just focus on the investments that we made in technology and implement them across the organization, you should see operating leverage kicking in and enhancing your ROAs.

Speaker #10: Which is another parameter on the retail space. And we do know that on the mortgages side, I do believe that we would be amongst the top two, with hardly a gap in terms of the quarterly disbursements that we have been doing in the auto loan space.

Speaker #10: We have grown well. We continue to be market leaders. And we have the largest engagement with all the OEMs, as well as the dealer base, which acts as the real feeder for the retail loans.

Seshadri Sen: Thanks. The second question is on retail loan growth. You've done well in terms of recovering the overall loan growth. The retail is still at, I think, in the single digits, I think, has some upside for a franchise like yours. Going forward, what would be the levers to accelerate retail loan growth? Which products, which channels, more harvesting of cross-selling within your existing customer base? Should we expect some forward momentum in that part of the business in the coming FY27 early in the year, and would it be back-ended or front-ended?

Speaker #10: So, between the physical channel, between the digital channels, between the customer acquisitions, and across the set of our core retail products, we do see that growing well.

Speaker #10: We also see ourselves doing well in a product that we have launched over the last year and has come up very well—has been our gold loan business.

Speaker #10: We've built a good-quality book out over there. And I do see that also continuing to contribute. The last lever I may touch upon to give you a sense has been on our SME business.

Srinivasan Vaidyanathan: I think I did cover it in my opening response to Mahrukh Adajania. We have seen good traction across our products in two-wheelers, personal loans, as well as in the mortgages space over the last three quarters sequentially. In terms of levers today, if I just take mortgages, we were doing mortgages earlier out of about 6,800 locations. We are now covering mortgages from more than 7,800 locations, closer to 8,000. One is we are using distribution. Two is we've got our digital channels working very well, and we have seen a higher utilization of our 10-second loans, both in our express loans, auto loans, and personal loans. We've also seen more addition to the customer acquisition base. That is what Sashidhar Jagdishan referred to earlier.

Speaker #10: We have been market leaders in our SME business. And today, we are number one in the country in the entire SME space, or MSME space.

Speaker #10: To give you some granularity, we are number one in 15 out of 28 states, and we are in the top two in 25 out of the 28 states.

Speaker #10: In MSME, if you also see the PAC, which my colleagues have put out, we've grown our business banking, which is mainly representative of our MSME—we've grown at about 20% year on year.

Speaker #10: And that will continue to also be in that range of 18 to 20, 21 percent, depending upon, obviously, some of the developments in the economy.

Speaker #10: So that should give you, I hope, a good sense of what will be the levers on our consumer bank, and the channels through which we will get it.

Speaker #9: Can you talk about the merger synergies as well?

Kaizad Bharucha: As well as the foray that we have done in the salary accounts. These salary accounts create the base for us for better cross-sell and penetration of our retail products. We are the leading bank in salary accounts, and the quality of the franchise we have out over there. If you look at our physical distribution of branches, if you look at the better penetration and utilization of our digital channels, as well as you look at the increasing acquisition that we have in our what we call our pre-approved base, because we have the history of the client, because of the salary relationship, has obviously created the momentum, without going down the asset quality ladder. Yeah. Okay, I'm being prompted by Sashidhar Jagdishan on a very important metric. We've seen our disbursements go up quarter-on-quarter, which is another parameter on the retail space.

Speaker #10: Oh, that wasn't the question, but I'm happy to cover it.

Speaker #9: Yeah. In the market.

Speaker #10: Okay. So, the other aspect, just to leave on the consumer side and the mortgages business, as well as some of the benefits that have accrued over the last couple of years from this business that we acquired.

Speaker #10: So, let me touch on a few of the levers, and I'm sure separately we could give you more color otherwise. So, from the book we inherited, we had roughly a penetration on the liability side, which was about 36% share.

Speaker #10: So, 36% of the people who had home loans with HDFC had their liabilities with us. Net of attritions, net of acquisitions, over this journey, this 36% has gone as high as 50% within the last two and a half years.

Speaker #10: And that tells you the liability franchise that we've got. As we've mentioned in our calls earlier in October and January, happy to update you that we continue to have 98% of all home loans that we disburse, our customers opening a liability account with us.

Kaizad Bharucha: We do know that on the mortgages side, I do believe that we would be amongst the top two with hardly a gap in terms of the quarterly disbursements that we have been doing. In the auto loan space, we have grown well. We continue to be market leaders, and we have the largest engagement with all the OEMs as well as their dealer base, which acts as the real feeder for the retail loans. Between the physical channels, between the digital channels, between the customer acquisitions, and across the set of our core retail products, we do see that growing well. We also see ourselves doing well in a product that we have launched over the last year and has come up very well, has been our gold loan business.

Speaker #10: And therefore, you've seen the shift move from 36% to 49-50% of stock as we sit on today. More importantly, more than the 50% stock that we sit on, today approximately a little over 60 to 65 percent of that stock pays their EMI through my own account.

Speaker #10: And which tells you the synergy which our home loan and our UR liability bring from a value accretion perspective as well as from a risk perspective.

Speaker #10: The second thing out over there would be, apart from the actual CASA balances that have grown. And at that point in time, we roughly had about ₹50,000 crore value of the CASA balances.

Kaizad Bharucha: We've built a good quality book out over there, and I do see that also continuing to contribute. The last lever I may touch upon to give you a sense has been on our SME business. We have been market leaders in our SME business, and today we are number one in the country on the entire SME space or MSME space. To give you some granularity, we are number one in 15 out of 28 states, and we are in the top two in 25 out of the 28 states in MSME. If you also see the pack which my colleagues have put out, we've grown our business banking, which is mainly representative of our MSME.

Speaker #10: We have today grown that to ₹86,000 crores. So that's been the growth in the two and a half years. Not only in the numbers, in terms of the engagement of the CASA accounts, mainly so.

Speaker #10: But also of the value accretion that has happened. A thing I had mentioned in the past, which had come up, and that continues to hold good—as the book matures, as the engagement matures—the average balances that we see of customers that keep their liability with us, who have their home loan, goes up 2 to 2.25x compared to the standard average balances that would otherwise be witnessed in the banks.

Kaizad Bharucha: We've grown at about 20% year on year, and that will continue to also be in that range of 18% to 20%, 21%, depending upon obviously some of the developments in the economy. That should give you, I hope, a good sense of what will be the levers on our consumer bank and the channels through which we will get in.

Speaker #10: Apart from that, finally, there is what we call the cross-sell tally internally, which consists of a host of products. Which, whilst not limited to, indicatively includes all the cross-sell that we do on the credit cards business to this portfolio, the insurance policies that they take to insure their homes, the wealth accounts that we open, as well as engagement on our digital properties, including the Smart Wealth and the PayZapp accounts or the PayZapp gateway of our wallet that they use.

Sashidhar Jagdishan: Can you talk about the merger synergies as-

Kaizad Bharucha: That wasn't the question, but I'm happy to cover it.

Sashidhar Jagdishan: Yeah. In the mortgage.

Kaizad Bharucha: Okay. Another aspect just to leave on the consumer side and the mortgages business as well as some of the benefits that have accrued over the last couple of years, from this business that we acquired. Let me touch on a few of the levers, and I'm sure separately we could give you more color, otherwise. From the book we inherited, we had roughly a penetration on the liability side, which was about 36% share. 36% of the people who had home loans with HDFC had their liabilities with us. Net of attritions, net of acquisitions over this journey, this 36% has come as high as 50% within the last two and a half years. That tells you the liability franchise that we've got.

Speaker #10: So the engagement is all around. And today, nearly 23% of our home loan customers on stock have our credit cards, which are active. So I hope that rounds up, Shashi, as you were mentioning, the flavor of how this has grown and in the manner it has grown and the way it will continue. Thank you, Keza.

Speaker #10: Thank you. That was extremely important. As to what we are looking at from a mortgage book perspective, it's not just the book, but the kind of primary relationship that we are all focusing on.

Speaker #10: And that's going to really be a large, sustainable franchise over the long run, and quality. And appreciate it. We have the lowest NPA percentages, as we understand, in the industry on a book of our size on the home loan book.

Kaizad Bharucha: As we'd mentioned in our calls earlier in October and January, happy to update you that we continue to have 98% of all home loans that we disburse to our customers opening a liability account with us. Therefore, you've seen this shift move from 36% to 49%, 50% of stock as we sit on today. More importantly, more than the 50% stock that we sit on, today, approximately in a little over 60% to 65% of that stock pays their EMI through our own account, and which tells you the synergy which a home loan and a liability bring from a value accretion perspective as well as from a risk perspective. The second thing out over there would be apart from the actual CASA balances that have grown, and at that point in time, we roughly had about INR 50,000 crore value of the CASA balances.

Speaker #9: Thank you. Next question is from the line of Rikin Shah from IXL Capital. Please go ahead.

Speaker #11: Good evening. So I have three questions. The first one is on the yield on investments. This number is down about 60 basis points in the last two quarters, when the overall yields have gone up.

Speaker #11: So, why is the interest income on investment yields going down? So that's one. Second, if you could just highlight what's the cost of deposit, and what is the residual repricing, if any, remaining from the current levels?

Speaker #11: And thirdly, it's on the Treasury gain. So, similarly, there seems to be no impact on the Treasury gains or effects, despite the yield movements and the RBI move.

Speaker #11: So, how should we think about it as we move into the next year on these particular two points? Thank you.

Speaker #10: Okay. And one thing that you touched upon is about the investment yield. Investment yields have been coming down, as you know, until the geopolitical risks started to increase, right?

Kaizad Bharucha: We have today grown that to INR 86,000 crore. That's been the growth in the two and a half years, not only in the numbers, in terms of the engagement of the CASA accounts, mainly staff, but also of the value accretion that has happened.

Speaker #10: At which time it started to go up. So, it's an effect of what—some of the maturing book that goes out and what the new book comes in—is one aspect of it.

Srinivasan Vaidyanathan: A thing I had mentioned in the past, which had come up and that continues to hold good, as the book matures, as the engagement matures, that the average balances that we see of customers that keep their liability with us who have their home loan, goes up 2 to 2.25x compared to the standard average balances that will otherwise be witnessed in the banks. Apart from that, finally, there is what we call the cross-sell thali internally, which consists of a host of products, which while not limited to indicatively, are the cross-sell that we do on the credit cards business to this portfolio, the insurance policies that they take to insure their homes, the wealth accounts that we open, as well as engagement on our digital properties, including the SmartWealth and the PayZapp accounts or the PayZapp gateway of our wallet that they use.

Speaker #10: And the second one is in terms of how the yield spike is now. And you will not see that because, given the size of the book, when you pick up a new security at this new yield, it's a drop in the ocean, right?

Speaker #10: It'll take time to bring it in. So, all you're seeing is the effect of the previous rate cycle moving in.

Speaker #9: Should be, if I can.

Speaker #10: Geopolitics, the yields—the 10-year G-Sec—were decisively moving up, right, in the last six, nine, six months specifically. But the book yields have kept going down.

Speaker #10: So, just wondering, what's the missing part here? See, Rikin, I do want to realize that you should appreciate that there is something called duration.

Speaker #10: And in a rate cycle, up or down, Treasury manages the book they want to do. There are certain duration aspects, which previously were 5-plus years of duration, and now goes to 4-plus something.

Speaker #10: So you come on the curve at different parts in different cycles. That's one. And the second thing is that you don't instantly see it if you look at what the last two quarters of rate that has changed.

Speaker #10: And if you look at the two quarters of accretion of investments, you will not see that it's going to be a fraction of the total book that you're seeing.

Srinivasan Vaidyanathan: The engagement is all around. Today, nearly 23% of our home loan customers on stock have our credit cards, which are active. I hope that rounds up, Sashidhar, as you were mentioning.

Speaker #10: And then the way you need to look at it is the movement. What is the security that is moving out? That means maturing, or participating in OMOs, that moves out.

Speaker #10: And what is the security that is coming in? And so that's the in and out difference. There are different equations. It's not a simple equation of what you see on the screen of the current yield that you're seeing.

Sashidhar Jagdishan: Yeah. Thank you.

Srinivasan Vaidyanathan: ... the flavor of how this has grown, in the manner it has grown, and the way it will continue.

Speaker #9: Yep, fair enough, fair enough. And on the other two questions, sir?

Sashidhar Jagdishan: Thank you, Kaizad. Thank you. That was extremely important as to what we are looking at from a mortgage book perspective. It's not just the book, but the kind of primary relationship that we are all focusing on, and that's going to really be a large, sustainable franchise over a long run.

Speaker #10: Yeah, the other one—you talked about the cost of funds. I think we published the cost of funds, which is about 4.4% or so.

Speaker #10: It's marginally come down. And then, from last year to this year, I think so far, it has come down by 50 basis points or so.

Srinivasan Vaidyanathan: Quality.

Speaker #10: And cost of deposits is part of a component of that. And, very similarly, it moves down in line with that.

Sashidhar Jagdishan: Quality. Very comprehensive. Appreciate it.

Srinivasan Vaidyanathan: We have the lowest NPA percentages, as we understand, in the industry, on a book of our size, on the home loan book.

Speaker #9: But the residual repricing, if any—any comments on that? Or are we already at the bottom in terms of the cost of funds?

Speaker #10: Residual repricing—if everything else remains the same, there will be further reduction coming on the residual because the time deposit takes five, six quarters or so to go.

Sashidhar Jagdishan: Thank you.

Operator 2: Thank you. Next question is from the line of Rikin Shah from IIFL Capital. Please go ahead.

Rikin Shah: Good evening. I have three questions. The first one is on the yield on investments. This number is down about 60 basis points in the last two quarters, and the overall yields have gone up. Why is the interest income on investment yields going down? That's one. Second, if you could just highlight what's the cost of deposit and what is the residual repricing, if any, remaining from the current levels. And thirdly, it's on the treasury gain. Similarly, there seems to be no impact on the treasury gains or effects, despite the yield movements and the RBI move. How should we think about it as we move into the next year on this particular two points? Thank you.

Speaker #10: And so, some residual, again, remains to be seen in terms of the preferences for what type of deposits are coming. Yes, all else remaining the same.

Speaker #10: There is a tendency for the repricing to factor in more.

Speaker #9: Got it, sir. And so the last question on the Treasury and effects—any comments, if any? There seems to be no negative impact in this quarter.

Speaker #9: So, how do we think about it going ahead?

Speaker #10: So there is some negative impact. If you see that the rate of growth on the Treasury income is modest, and the reason for that modesty is that I'm talking about the effects component of the Treasury.

Speaker #10: It's modest because there is a volume impact. So, due to various risks on the foreign exchange trade, there have been lower volumes and lower spreads too.

Srinivasan Vaidyanathan: Okay. One thing that you touched upon is about the investments yield. Investments yield have been coming down, as you know, until the geopolitical risk started to increase, right? At which time it started to go up. It's an effect of what some of the maturing book that goes out and what the new book comes in, is one aspect of it. The second one is in terms of how the yield spike is now, and you'll not see that, because given the size of the book, when you pick up a new security at this new yield, it's a drop in the ocean, right? It'll take time to bring it in. All you are seeing is the effect of the previous rate cycle moving in.

Speaker #10: And also, in terms of that, there is some impact of the unwinding that is also there. Yeah.

Speaker #9: Got it. Thank you, sir.

Speaker #10: Thank you. Yeah.

Speaker #9: Thank you. Next question is from the line of Abhishek Moralka from HSBC. Please go ahead.

Speaker #11: Hi, good evening. Thanks for taking my question. So I had a question on the third-party distribution fee. Actually, if I look at it on a full portfolio basis, the growth has been hardly three and a half percent.

Speaker #11: And this is lagging the overall customer growth. This is also, when you compare it to the retail asset and retail liability fee growth, this is lagging quite a bit.

Rikin Shah: Shri, if I can-

Srinivasan Vaidyanathan: Yes, sir.

Rikin Shah: Before the geopolitics, the yields, the 10-year G-Secs were decisively moving up, right? In the last six months specifically. The book yields have kept going down. Just wondering, what's the missing part here?

Speaker #11: So what is really leading to this? Is it just a slowdown, or has cross-sell become more difficult, or is it the defocusing on some products? What's really leading to this lower growth in this line?

Srinivasan Vaidyanathan: See, Rikin, I do want to realize that you should appreciate that there is something called duration, and in a rate cycle up or down, Treasury manages the book they want to do. There are certain duration aspects, which is previously 5-plus years of a duration goes to 4-plus something. You come on the curve different parts and different cycles. That's one. Second thing is that you don't instantly see, if you look at what the last two quarters of rate that has changed, and if you look at the two quarters of accretion of investments, you'll not see. That is going to be a fraction of the total book that you are seeing. Then the way you need to look at it is the movement. What is the security that is moving out?

Speaker #11: So that's point number one—question number one, sorry. The other one is on margin. So you said that there's some repricing of TDs left, which should be positive.

Speaker #11: But on the other side, the loan mix is gradually changing more towards corporate. How should we look at margins from here for, let's say, the next year?

Speaker #11: Does it trend down, or does it flatten out?

Speaker #10: So again, I'll first take the third-party products. Yes, the third-party products' revenue growth has been modest. Both of those components—which is the volume growth—has also been modest.

Srinivasan Vaidyanathan: That means maturing or participating in OMOs that moves out, and what is the security that is coming in? That's the in and out. There's a different equation. It's not a simple equation of what you see on the screen of the current yield that you are seeing.

Speaker #10: It's positive, but modest. Given that, whatever preferences the customers have, I think last year there was somewhat of a good amount of spike that we saw as we entered into the fourth quarter.

Rikin Shah: Yes, fair enough.

Speaker #10: If I could be fine. And so that was part of—there is some volume kind of tippingness that we are seeing. The second thing is, in terms of spreads.

Srinivasan Vaidyanathan: Yes.

Rikin Shah: On the other two questions, sir?

Srinivasan Vaidyanathan: The other one you talked about, the cost of funds. I think we published the cost of funds, which is about 4.4 or so. It's marginally come down. From last year to this year, I think so far it's come down by 50 basis points or so. Cost of deposits is part of a component of that, and very similarly, it moves down in line with that.

Speaker #10: That is, the mix of products that determine the spreads has also impacted. So we are seeing that the earnings—that means our earnings on product on the third-party commission—is also subject to the mix of products that get taken.

Rikin Shah: The residual repricing, if any comments on that? Are we already at the bottom in terms of the cost of funds?

Speaker #10: And so, there's a mix also ahead of unfavorable impact. So that means lower realization of income there. That's the reason for the contribution.

Srinivasan Vaidyanathan: Residual repricing, if everything else remains the same, there will be further reduction coming on the residual because the time deposit takes 5, 6 quarters or so to go. Some residual again remains to be seen in terms of the preferences for what type of deposits coming.

Speaker #11: Interesting. On the mix, so lower live sales, is it? And is that temporary, or is it some change in process or something which has led to it?

Speaker #11: Or is it just coincidental, or nothing really to read into it? How do we look at it?

Rikin Shah: Yes.

Srinivasan Vaidyanathan: All else remaining same, there is a tendency for the repricing to factor in more.

Speaker #10: Nothing really to read into it. It's just a question of whether our RMs are as engaged today as they were engaged last year.

Rikin Shah: Got it, sir. The last question on the treasury and FX, any comments, if any? There seems to be no negative impact in this quarter. How do we think about it going ahead?

Speaker #10: It's a function of what the preference is, and that is why you saw even the product preferences somewhat different. So it's a question of how we get on more customers and spread it around to be much more penetrated.

Srinivasan Vaidyanathan: There is some negative impact. If you see that the rate of growth on the treasury income is modest. The reason for that modest is that, I'm talking about the FX component of the treasury, is modest because there is a volume impact. Due to various risks on the foreign exchange trade, there have been lower volumes and lower spreads too. Also in terms of the-

Speaker #10: We still have only a mid-single-digit penetration in our base, and so the opportunity space continues to be there. Enormous opportunity space continues to be there.

Speaker #10: Again, you talked about the NIM, which is the second part of the question. Again, just to repeat, right? The transmission has happened on the assets.

Speaker #10: And the mix of assets can impact, depending on what it is. The cost of funds, while time deposit repricing, can continue to be there.

Rikin Shah: Impact of the unwinding.

Srinivasan Vaidyanathan: There is some impact of the unwinding that is also there, yeah.

Rikin Shah: Got it. Thank you, sir.

Speaker #10: Again, it depends on the rate cycle, what happens. You see that there's a stiffness in the rates. Across, right, from the last, I think, at least four months, we have not seen time deposit rates change in the market, right?

Srinivasan Vaidyanathan: Thank you.

Operator 2: Thank you. Next question is from the line of Abhishek Murarka from HSBC. Please go ahead.

Speaker #10: And we are fairly priced with the competition. And we're not seeing four months of any kind of a change that has happened. Which, again, as one would give some time for change, you've seen that there are other things in the month of March—the geopolitical thing that's coming.

Abhishek Murarka: Hi. Good evening. Thanks for taking my question. I had a question on the third-party distribution fee. Actually, if I look at it on a full year basis, the growth has been hardly 3.5%. This is lagging the overall customer growth. This is also, when you compare it to the retail asset, retail liability fee growth, lagging quite a bit. What is really leading to this? Is it just a slowdown or cross-sell has become more difficult or the refocusing on some product? What's really leading to this lower growth in this line? That's question number one. The other one is on margin. You said that there's some repricing of TDs left, which should be positive, but on the other side, the loan mix is gradually changing more towards corporate.

Speaker #10: Well, that has hardened the rates again, so it remains to be seen. But there's a range bound, is what I would say. But focus more on the...

Speaker #1: The terms—because if this becomes a kind of a, where it continues to be within a small range bound, then we work towards getting returns to be stable, to going up through other levers.

Speaker #2: Got it Okay . Okay . Thank you for that . Thank you . Thank you . And all the best Thank you .

Speaker #3: Next question is from an engineer from India. Please go ahead.

Abhishek Murarka: How should we look at margins from here for, let's say, the next year? Does it trend down or does it flatten out?

Srinivasan Vaidyanathan: Again, I'll first take the third-party products. Yes, the third-party products revenue growth has been modest. Both of those components, which is the volume growth, has also been modest. It's positive but modest, given that whatever preferences the customers have. I think last year there was a good amount of spike that we saw as we entered into Q4.

Abhishek Murarka: FY25.

Srinivasan Vaidyanathan: FY25. There is some volume kind of stickiness that we are seeing. The second thing is in terms of spread. That is, the mix of products that determine the spreads has also impacted. We are seeing that the earnings, that means our earnings on the third-party commission, is also subject to mix of products that get taken. The mix also had an unfavorable impact. That means lower realization of income there. That's the reason for the combination.

Abhishek Murarka: Mr. Srinivasan, on the mix, so lower life sales, is it? And is that temporary or is some change in process or something which has led to it? Or is it just coincidental or nothing really to read into it? How do we look at it?

Srinivasan Vaidyanathan: Nothing really to read into it. It's just a question of our RMs are engaged as much as they are engaged today versus they were engaged last year. It's a function of what the preference is, and that is why you saw even the product preference is somewhat different. It's a question of how we get on more customers and spread it around to be much more penetrated. We still have only a mid-single digit penetration in our base, and so the opportunity space continues to be there. Enormous opportunity space continues to be there. Again, you talked about the NIM, which is the second part of the question. Again, just to repeat, the transmission has happened on the assets and the mix of assets can impact depending on what it is. The cost of funds, while time deposit repricing can continue to be there.

Srinivasan Vaidyanathan: Again, it depends on the rate cycle, what happens. You see that there's a stiffness in the rates across. From the last, I think at least four months, we have not seen our time deposit rate change in the market.

Abhishek Murarka: Mm-hmm.

Srinivasan Vaidyanathan: We are fairly priced with the competition, and we've not seen four months of any kind of a change that has happened. Which again, as one would give some time for change, you've seen that there are other things in the month of March, the geopolitical thing that's come about, that has hardened the rates again. It remains to be seen, but it's range-bound is what I would say, but focus more on the returns. Because if this becomes kind of a way where it continues to be within a small range bound, then we work towards getting returns to be stable to go up through other levers.

Abhishek Murarka: Got it. Okay. Thank you for that.

Srinivasan Vaidyanathan: Thank you.

Abhishek Murarka: Thank you, and all the best.

Operator 2: Thank you. Next question is from the line of Kiran Shroff from CLSA India. Please go ahead.

Kiran Shroff: Yeah. Hi, team. Congratulations.

Operator 2: Kiran, sorry. We are losing your audio.

Srinivasan Vaidyanathan: Kiran, kindly repeat because we lost your voice.

Operator 2: Sir, we have lost the line for the participant. Ladies and gentlemen, we will take that as our last question as we have come to the end of the time allotted for the call. I would now like to hand the conference over to Mr. Vaidyanathan for closing comments.

Srinivasan Vaidyanathan: Thank you. Thank you all for participating today. We are closing at the appointed time, which is 5:00PM because we have another meeting scheduled soon after this. If there are any more questions, comments to be provided, please feel free to contact our investor relations team. We'll be happy to engage with you over the next few days, weeks, whatever it takes. Thank you. Have a great weekend. Bye-bye.

Operator 2: Thank you very much. On behalf of HDFC Bank Limited, that concludes this conference. Thank you for joining us, and you may now disconnect the line. Thank you.