Abhishek Murarka

Abhishek Murarka asked about the bank's personal loan growth strategy, home loan acceleration plans, and the lucrativeness and yield of gold loans.

Answer

Kaizad Bharucha (DMD) stated the bank would not lower credit standards for personal loans, participating in growth segments based on economic environment. For home loans, he noted market share increases and a strategic choice not to lower rates aggressively, aiming to be 'with market' in 18-24 months while prioritizing economic sense over pure market share. He added that pricing sanity is returning but the market remains uneven. On gold loans, Kaizad Bharucha (DMD) confirmed good yields and a steady growth path, describing them as 'pretty rich' given their collateralized nature. Srinivasan Vaidyanathan (CFO) added that gold loan yields are incremental to the bank's overall and retail product yields.

Abhishek Murarka from HSBC inquired about the bank's new comfort zone for the credit-to-deposit (CD) ratio, the rationale for making an additional INR 1,700 crore contingent provision, and current asset quality trends in unsecured retail.

Answer

CFO Srinivasan Vaidyanathan stated the medium-term CD ratio target is the pre-merger level of 85-90%. He clarified the contingent provision is for building future resiliency and is not linked to any observed stress. Both he and CEO Sashidhar Jagdishan emphasized that asset quality remains exceptionally stable, with retail NPA (ex-agri) at 82 basis points, unchanged from the previous year.

Abhishek Murarka from HSBC inquired about the bank's new comfort zone for the credit-deposit (CD) ratio, the rationale behind the additional INR 1,700 crore contingent provision, and the current state of asset quality in the unsecured retail and PLCC portfolios.

Answer

Chief Financial Officer Srinivasan Vaidyanathan stated the medium-term CD ratio target is 85-90%, in line with pre-merger levels. He explained the contingent provision was a proactive measure to build resilience and not linked to any observed stress. Both he and MD & CEO Sashidhar Jagdishan emphasized that asset quality remains exceptionally benign and stable, with retail NPA (ex-agri) holding steady at 82 basis points year-over-year.

Abhishek Murarka sought clarification on the timing of repo rate cut transmission to loans and the resulting NIM trajectory. He also asked about the timeline for achieving a 2% ROA and whether other P&L levers like fees or OpEx could accelerate this.

Answer

CFO Srinivasan Vaidyanathan and executive Bhavin Lakhpatwala clarified that the full impact of recent repo cuts would appear in the next quarter. Vaidyanathan corrected the idea of a '2% ROA target,' explaining it was a historical frequency, not a formal goal. He highlighted OpEx efficiency as a key lever, pointing to productivity gains from past branch investments and the bank's best-in-class cost-to-assets ratio as areas for continued improvement.

Abhishek Murarka of HSBC sought to clarify the exact timing of repo rate cut transmission to loans, the resulting NIM trajectory for upcoming quarters, and whether achieving a 2% ROA was a medium-term target or if other P&L levers like fees or OpEx could drive improvement.

Answer

Executives Srinivasan Vaidyanathan and Bhavin Lakhpatwala confirmed the full 50 bps impact of the repo cut would be seen in Q1, as transmission occurs on specific reset dates. Vaidyanathan advised looking at the annual trend for NIMs, not quarter-to-quarter fluctuations. He clarified that the bank has not set a 2% ROA 'target,' but noted it has been the most frequent historical achievement. As for other levers, he pointed to future productivity gains from past branch network investments as a key driver for improving OpEx efficiency, highlighting the bank's best-in-class cost-to-assets ratio.

Abhishek Murarka requested a breakdown of the loan book by interest rate linkage (repo/EBLR, MCLR, fixed). He also asked about the levers available to the bank to offset potential Net Interest Margin (NIM) compression from a future repo rate cut.

Answer

CFO Srinivasan Vaidyanathan stated that approximately 69-70% of the loan book is linked to an external benchmark (floating rate), which is a similar level to previous quarters. Regarding NIMs, CEO Sashidhar Jagdishan explained that the bank has always maintained a matched modified duration on its balance sheet, which should prevent significant impact from rate movements in the near term. He expects NIMs to remain within the current tight range. He added that once there is more clarity on the macro environment and regulations, a normalization of the LCR could provide a 'kicker' to margins in the medium term.

Abhishek Murarka from HSBC asked if further risk-based tightening is needed for the cards and personal loan segments, what drove the sequential growth in corporate loans, and how the bank plans to manage its LCR surplus under new regulations.

Answer

Executive Anindya Banerjee stated that no material tightening is planned, as personal loan growth has already moderated. He attributed the corporate loan growth to specific, well-priced opportunities in the NBFC and real estate sectors, not a strategic shift from retail. On the LCR, he mentioned that the bank is still formulating its strategy for both the asset and liability sides of the balance sheet in response to the new rules.