Anand Swaminathan

Anand Swaminathan asked for key success metrics and lagging areas two years post-merger, and for a timeframe to return to above 2% Return on Assets (ROA).

Answer

Sashidhar Jagdishan (CEO) highlighted the merger's complexity, the need to step up fund-raising, and a strategic call to reduce the credit-deposit ratio. Despite this, the bank maintained stability in NIMs, cost-to-earnings, asset quality, and ROA, while investing in technology and distribution. Kaizad Bharucha (DMD) detailed home loan integration successes, including opening to self-employed, reducing turnaround times, and successful cross-selling. Srinivasan Vaidyanathan (CFO) stated ROA is currently 1.8%-1.95%, with opportunity for improvement coming from optimizing the cost of funds by replacing borrowings and shifting deposit mix towards CASA.

Anand Swaminathan requested clarity on recent senior management changes in the Commercial and Rural Banking (CRB) division. He also asked if the bank has enough levers to defend its ~1.8% Return on Assets (ROA) level as it enters a rate cut cycle.

Answer

Executive Sashidhar Jagdishan and CFO Srinivasan Vaidyanathan clarified that the CRB head is on a personal sabbatical and the bank has reorganized its entire asset business under Deputy MD Kaizad Bharucha to drive synergies and productivity. Regarding ROA, Vaidyanathan noted it has been stable around 1.9% post-merger and historically operates in a 1.9%-2.1% range. He expects it to remain in a narrow band, as any outperformance creates opportunities for reinvestment in long-term growth.

Anand Swaminathan from Bank of America asked for clarity on recent senior management changes in the Commercial and Rural Banking (CRB) division and questioned whether the bank has enough levers to defend its ~1.8% Return on Assets (ROA) during a rate cut cycle.

Answer

Executive Srinivasan Vaidyanathan and Executive Sashidhar Jagdishan addressed the management changes, explaining that the head of CRB, Rahul Shukla, took a personal sabbatical. They detailed a reorganization under Deputy MD Kaizad Bharucha aimed at driving synergies and productivity, particularly by cross-selling products in rural markets. On ROA, Vaidyanathan noted the bank has consistently operated around 1.9% post-merger and aims to maintain this stable range. He added that any outperformance would likely be reinvested for long-term growth, while acknowledging a potential fluctuation of +/- 10 basis points in a given year is possible.

Anand Swaminathan sought clarity on the CEO's intention to continue for another term. He also questioned the bank's strategy regarding the trade-off between growth and profitability, specifically if the bank is foregoing higher growth opportunities to maintain its superior Return on Assets (ROA) compared to peers, and if it would consider accepting slightly lower ROAs for accelerated growth.

Answer

Anindya Banerjee, CFO, stated that the CEO's term has a year remaining, and the board will make a decision with appropriate disclosure at that time. Regarding growth and profitability, Mr. Banerjee clarified that the bank focuses on risk-adjusted Profit Before Provisions and Tax (PPOP) within a sustainable framework, viewing ROA as an outcome rather than a direct target. He emphasized that the bank is not sacrificing long-term PPOP growth and aims for sustainable accretion over time.

Anand Swaminathan of Bank of America asked about the elasticity of savings rate cuts and the potential for a theoretical floor. He also requested a deeper understanding of the risk profile and profitability drivers of the rapidly growing Business Banking portfolio.

Answer

Executive Anindya Banerjee explained that there is no direct, quantifiable relationship for savings rate cuts, as each bank sets them optimally. He detailed that Business Banking growth is driven by distribution, advanced underwriting models, and digital offerings. He characterized the portfolio as granular, well-diversified, and performing strongly with low credit costs, emphasizing the holistic 'customer 360' benefits over just yield.