HDFC Bank splits retail loans division after mega merger: Report

HDFC Bank CEO Sashidhar Jagdishan has reportedly split retail loans into mortgage and non-mortgage segments, a report said on Wednesday. The two new segments will have two separate group heads and two regional heads for branch banking, which would be pivotal for liability growth. 

The changes are effective October 1, the bank said in an internal communication sent to its employees on Tuesday, the Economic Times reported. Jagdishan, who is the second CEO of the bank's three-decade journey, told the bank employees that the organisation changes will help bring in a "very sharp focus on leveraging what we have built, and for enhanced execution".

He focused on customer centricity in the memo. "The reorganisation, positioned for growth, has at its heart service to the customer and delivering value to its stakeholders, while continuing to fortify the brand's market competitiveness," Jagdishan said in the note.

The report said Arvind Kapil, country head for retail assets, will now oversee the mortgage business as group head, which includes the bank's merged home loan business, loans against property (LAP) and sales business from the erstwhile HDFC.

Retail assets that include the bank's high-yielding unsecured, small businesses and vehicle loans businesses will now be helmed by group head Arvind Vohra, the report added.

The bank has divided its branch banking business into two regions. HDFC Bank now has more than 8,000 branches, having opened 40% new ones over the past two years, dwarfing its private sector rivals in generating deposits per branch.

On Tuesday, it was reported that HDFC Bank will be restructuring its top management, the bank reportedly told its employees in a memo sent on Sunday. The bank, as per a report in Bloomberg News, has brought information technology and digital functions, led by Ramesh Lakshminarayanan directly under CEO Sashidhar Jagdishan. The bank is reportedly depending on technology to offer more products and services across its branches.

Besides, Ashish Parthasarthy, who led the treasury since 2009, will get responsibility for the key retail branch business that handles deposits and product distribution.

Under Parthasarthy, the lender is splitting the geographical management of the retail branch business to handle its expansion and product plans in a more structured way, the people said. It will be co-led by Smita Bhagat and Sampath Kumar.

HDFC Bank Q2 Update

HDFC Bank on Wednesday reported 57.7 per cent year-on-year (YoY) growth in its gross advances in the September quarter while deposits grew about 30 per cent YoY in the quarter.

The lender informed exchanges that its gross advances aggregated to approximately Rs 23,54,500 crore as of September-end, a growth of around 57.7 per cent on a YoY basis and a growth of around 44.4 per cent on a quarter-on-quarter (QoQ) scale.

Grossing up for transfers through inter-bank participation certificates and bills rediscounted, the bank’s advances grew by around 60 per cent YoY and 43 per cent QoQ.

Domestic retail loans recorded a growth of 111.5 per cent YoY, commercial & rural banking loans grew by around 29.5 per cent while corporate & other wholesale loans grew by around 8 per cent.

On the deposit side, HDFC Bank's deposits aggregated to approximately Rs 21,73,000 crore, a growth of around 29.9 per cent YoY and 13.6 per cent QoQ.

Home loan disbursals during the first quarter post-merger were the best ever at Rs 48,000 crore. "This is a growth of 14 per cent over the quarter ending June 30, 2023, and a growth of 10.5 per cent over the quarter ending September 30, 2022," it said.

Having lost around 3 per cent in the last 2 weeks, HDFC Bank shares were trading 0.4 per cent higher today at Rs 1,514 on BSE following the release of the quarterly business update.

While global brokerage firm Nomura had downgraded HDFC Bank citing merger-related stress points, Jefferies has retained a buy call on the stock with a target price of Rs 2,030.

"After having emerged as the 7th largest bank in the world, HDFC Bank now looks attractive for global portfolios as well. It trades at 2.2x 12mth fwd adj. PB and 15x 12mth fwd adj. PE," Jefferies said, adding that its strong retail asset portfolio, improving deposit franchise, synergies from a merger with parent HDFC and branch expansion to support deposit growth will help the bank deliver 16-17% earnings growth in the next three years.

At 12.00 PM, shares of HDFC Bank were trading at Rs 1,523.80, up by 1.05 per cent.

 

Also read: HDFC Bank shares rise as loan book grows 4.9% sequentially; check analyst views & other details

Also read: HDFC Bank to go for management overhaul months after mega merger: Report

Also watch: Aditya Birla Sun Life Dividend Yield Fund vs ICICI Prudential Dividend Yield Equity Fund vs HDFC Dividend Yield Fund: Mutual funds returns, AUM, NAV, risks and more