HDFC Bank Ltd Q4 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Chintan Joshi - Autonomous Research - Analyst : Hi, good evening. Can I start with NIM? Some expansion coming through this quarter, if you could explain what the drivers of that expansion goes? And also how we can think about NIMs progressing over the next year? On one hand, you've got the rate cuts, but on the other hand, your funding synergies are gradually coming through. Do you think if you see 100 bps rate cycle, NIMs can be higher than where we are today? That's on NIMs. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 19, 2025 / 12:30PM, HDBK.NS - Q4 2025 HDFC Bank Ltd Earnings Call And then the second question I have is more on the corporate sector. If I look at cash and investments on corporate sector balance sheet over the last three, four years and how the in the banking system that's kind of gone up significantly. But these deposits are short term in nature, we don't have the LCR benefit like we have with the household sector, how does the bank take on these deposits? How do they use it? I assume they can't really be used for term lending. It would be helpful to understand in this period where we've got geopolitical uncertainty, there will be even more corporate deposits, how does the banking system or yourselves use that?

Question: Chintan Joshi - Autonomous Research - Analyst : So quick on your NIM point, how much of the TDs will reprice within the first year?

Question: Chintan Joshi - Autonomous Research - Analyst : Just to follow up.

Question: Maruk Adajania - Nuvama Wealth Management Ltd. - Analyst : Yeah, hi. Good evening and congratulations. I had two questions. The first one is on deposit growth. So large banks have cut deposit rates in the most popular budgets by 30 bps to 45 bps, which is of course transmission, but are you comfortable that the liquidity position has changed enough to support a healthy deposit growth for the system and yourself? Because tight liquidity was really a big issue for the last 1.5 years, except in the last two to three months. So that's my first question. And my second question is on your priority progress. Of course, your CRB has been growing faster than your other loans. But if at all, there are any shortfalls how would that be managed? Would that have any ROA impact so just a focused discussion on how priority will be managed?

Question: Maruk Adajania - Nuvama Wealth Management Ltd. - Analyst : Okay. Perfect. Thank you.

Question: Anand Swaminathan - Bank of America - Analyst : Great, thank you. I have a couple of questions. Sashi, first question is on CRB. There has been a lot of media noise around senior management and some changes. It would be great if you could give us some confidence around what's happening and give us some clarity around that? That's number one. And number two, on ROAs. We have successfully defended the 1.8% ROA we've been guiding for the last several quarters. Srini, actually we go into the rate cut cycle and growth slightly improving in the FY26, do we have enough levers to defend this 1.8% level or we should expect a brief kind of decline and then come back above 1.8% when growth eventually occurs? Thank you.

Question: Anand Swaminathan - Bank of America - Analyst : Thank you. That's very useful.

Question: Rikin Shah - IIFL Capital Services Limited - Analyst : Yeah, thank you for the opportunity. Two quick questions. First one for the repo-link loans. Do they get repriced immediately as soon as the repo rate changes? Or is there usually a lag of a few months from the change of repo rate? And secondly, an extension to this, does the number of days impact your reported margins? That's the first question. And the second one is, was there any reversal on AIF provisions in this quarter? Those are my 2 questions.

Question: Rikin Shah - IIFL Capital Services Limited - Analyst : Got it. And the reversal of AIF provision, please?

Question: Rikin Shah - IIFL Capital Services Limited - Analyst : Okay. The context of this question, Srini, was that in note number 15 to your results, it says that AIF-related provision stock is around INR288 crore right now. The last quarter, it read around INR350 crore. So I just wanted to clarify, was there any reversal or just some of the AIF investments mature and hence, you were not required to carry them? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 19, 2025 / 12:30PM, HDBK.NS - Q4 2025 HDFC Bank Ltd Earnings Call

Question: Rikin Shah - IIFL Capital Services Limited - Analyst : Understood. Thank you very much.

Question: Kunal Shah - Citigroup - Analyst : Yeah, thanks for taking the question. A couple of questions. So firstly, again, sorry to harp again on margins. But the way you have been indicating the balance sheet construct is such that we should be able to operate margins within a narrow band, does that really change with the relatively higher repo rate cut? Or do we have additional levers to still manage margins relatively better compared to that of peers?

Question: Kunal Shah - Citigroup - Analyst : Sure. And so on CASA, we have been indicating that in the falling interest rate cycle, generally, we would tend to improve the CASA, but the rate action both on the savings as well as FD seems to be almost similar or savings is relatively higher, then would it be fair to assume that maybe the overall structurally declining SAR that phase can very much continue? And maybe a follow-up on the LDR, when you indicated that now LDR we will not see a steep decline, are we changing a stance that we need to get it to the premerger level at an accelerated pace and maybe even if it holds relatively higher at 90, 92, we would be comfortable then over the next 18, 24 months?

Question: Kunal Shah - Citigroup - Analyst : And LDR?

Question: Kunal Shah - Citigroup - Analyst : Sure. Thanks and all the best.

Question: Abhishek Murarka - HSBC Securities & Capital Markets - Analyst : Yeah, hello, good evening, and thanks for taking my question. So a couple of very quick clarifications and then one question. The first is when you say repo cut gets passed on right away, does it happen exactly right away or does it happen on a particular day in a month or a particular day in a quarter when does the transmission actually happen? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 19, 2025 / 12:30PM, HDBK.NS - Q4 2025 HDFC Bank Ltd Earnings Call

Question: Abhishek Murarka - HSBC Securities & Capital Markets - Analyst : Right, right. So the cumulative impact will probably be seen in Q1 may not have been seen in Q4 yet, that's the understanding, right?

Question: Abhishek Murarka - HSBC Securities & Capital Markets - Analyst : Right. And then just in terms of the- Unidentified Company Representative In fact that quarter four, Abhishek, the first repo rate cut happened in February itself. So even the quarter impact of that you have not seen, you will see that only in the April to June quarter. So you'll see the full 50 basis points impact happening in this quarter, what you've not seen perhaps in the fourth quarter.

Question: Abhishek Murarka - HSBC Securities & Capital Markets - Analyst : Yeah. Fair enough. And therefore, in terms of this 2% ROA target, let's say, is this like now a two year or a three year kind of target? Because it will take time for cost of funds to catch up and for policy rates to maybe stabilize at some level. So does this become like a '27 or '28 kind of target for you? Or are there other levers, which helps you-- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 19, 2025 / 12:30PM, HDBK.NS - Q4 2025 HDFC Bank Ltd Earnings Call

Question: Abhishek Murarka - HSBC Securities & Capital Markets - Analyst : Yeah. Okay. Fair enough. So let me modify the question. Basically, do you have any other levers in your P&L, maybe fees or maybe OpEx where you could see some improvement from here?

Question: Abhishek Murarka - HSBC Securities & Capital Markets - Analyst : Yeah, exactly. So that is what I was wondering if it can improve even further from here because you're already very efficient when you compare to your peers?

Question: Abhishek Murarka - HSBC Securities & Capital Markets - Analyst : Got it. Okay. Thank you so much and all the best.

Question: Harsh Modi - JPMorgan Chase & Co. - Analyst : Yeah, hi. Thanks, for allowing me to ask a question. First is on CASA market share. Could you provide some details over, let's say, next 18 to 24 months? How do you see your both CA and SA market share evolve? And is there any particular number that we could think about in terms of CASA ratio, let's say, over 18 to 24 months? Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 19, 2025 / 12:30PM, HDBK.NS - Q4 2025 HDFC Bank Ltd Earnings Call

Question: Harsh Modi - JPMorgan Chase & Co. - Analyst : Right. If I could -- okay, I understand that, Srini. If I could rephrase the question, especially for savings account market share. Incremental savings account market share over next 18 to 24 months. Given your investments in branches that you just explained and technology and best-in-class distribution network, do you expect to gain meaningful market share on savings account in next annual 24 months? Or would you probably just be maintaining your market share over the next 18, 24 months? How do we think about that?

Question: Harsh Modi - JPMorgan Chase & Co. - Analyst : All right. Thank you.

Question: Param Subramanian - Investec - Analyst : Hi, good evening. Thanks for taking my question. There's a few data keeping questions. Firstly, what is the maturity of term deposits on book? I don't mean on sourcing, on book. And similarly, how much of your borrowings mature over the course of next year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 19, 2025 / 12:30PM, HDBK.NS - Q4 2025 HDFC Bank Ltd Earnings Call

Question: Param Subramanian - Investec - Analyst : Okay. Broad number would also do, Rahul.

Question: Param Subramanian - Investec - Analyst : On borrowings over the next 12 months.

Question: Param Subramanian - Investec - Analyst : Okay, thanks, really. Just on that, just one additional part. How much of your borrowing is, say, floating rate hedged as we go into this rate cycle? Just a relevant question there. And secondly, last quarter, you had given a number on the PSL shortfall in SMF and weaker section being about 1%, where are we there broadly?

Question: Param Subramanian - Investec - Analyst : And which is the relevant floating benchmark once you look at--

Question: Piran Engineer - CLSA - Analyst : Yeah, hi team, congrats on the very strong numbers. Firstly, just -- I know it's early days, but have we started cutting lending rates on fixed-rate products (technical difficulty).

Question: Piran Engineer - CLSA - Analyst : So congrats on the quarter. My first question is, how has the industry or have we started cutting lending rates on fixed rate products like vehicle loans (technical difficulty) after the 50 bps repo rate cut? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 19, 2025 / 12:30PM, HDBK.NS - Q4 2025 HDFC Bank Ltd Earnings Call

Question: Piran Engineer - CLSA - Analyst : Okay. So it's fair to say we've not got lending rates like in auto loans, et cetera?

Question: Piran Engineer - CLSA - Analyst : Okay. Fair. And sir, just secondly, on your unsecured book of roughly INR2 lakh crore, what percentage would be unsecured business loans? And can you also just talk a bit about this business, the customer profile? Are these repeat loans to existing customers? Or do you also acquire fresh new-to-bank customers through this product? And are there -- like when we have the retail asset quality cycle -- by we, I mean the industry, are there some signs of stress in unsecured business loans? Just an overview of this would be useful. Thanks.

Question: Piran Engineer - CLSA - Analyst : Okay. This is useful. Thank you, sir, and wish you all the best. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 19, 2025 / 12:30PM, HDBK.NS - Q4 2025 HDFC Bank Ltd Earnings Call