HDFC Bank Limited Q3 FY2026 earnings call

• Credit growth buildup has been encouraging with balanced credit across customer segments, aided by easing rate cycle and benign credit. - Funding through deposits maintained rate discipline, with core individual retail segments strong, including CASA growth. - Cost of funds moved down, cost under control due to productivity improvements. - Regulator and government supporting economic and credit growth, with liquidity considerations and focus on profitable growth. - Focus on granular customer segments and aligning pricing with segmented approach.

No detailed breakdown of product segment financial performance in terms of absolute revenue and contribution % was provided in the transcript.

• Expect loan growth to outpace the system in FY '27. - LDR on a glide path towards lower levels, aiming for 85% to 90% by FY '27. - Top line growth in line with system this financial year and faster than the system in the next financial year.

• Uncertainty around timing to reach LDR targets due to seasonality and market conditions. - Agri compliance provisions with potential future calibration needed. - Labor code impact being an estimate based on actuarial process with evolving rule-making. - Competitive intensity in products like auto and home loans with potential for irrational pricing affecting margins.

Q: When would HDFC Bank reach an LDR close to 90% or below?

A: Expect to get down to low 90s or lower in 1-2 years with confidence in the pillars in place.

Q: Any agri compliance issues and provisions?

A: Regulatory inspection complete, ~INR 5 billion provisions subsumed in December, with ongoing calibration of agri portfolio.

Q: Deposit growth and LDR?

A: Deposit growth pace should match top line growth, with focus on retail granular segments and managing bulk deposits.

Q: Labor code impact?

A: Estimate based on actuarial process, with evolving rule-making and no immediate recurring impact determination.

Q: Asset quality?

A: Asset quality pristine with low gross NPA accretion, no major segment concerns.

Q: Branch productivity and deposits?

A: Branch expansion trend with per branch productivity increasing, vintage branches contributing to deposits, and plans to evaluate future branch additions based on cohort performance.

Q: LCR and margins?

A: LCR was 116% this quarter, new guidelines not expected to materially impact; margins affected by cost of funds lag effects, borrowing, and CASA growth.

Q: Deposit growth mix?

A: Individual retail deposits in branches growing double digits, institutional and non-individual retail deposits in single digits.

Q: Credit cost?

A: Net slippages excluding agri are low, credit cost net of recoveries is steady with steady slippages, losses, and recoveries.

Q: Cards?

A: Card focus on transactors and deposits contribution, with revolver balances lower and customer profiles different from pre-2020 levels.

Q: Loan growth guidance?

A: Expect system growth 12%-13% next year, aiming to grow above system by a couple of hundred basis points.

Q: Competitive intensity in auto/home loans?

A: Seen irrational pricing in auto and home loans, which is not sustainable.