Mahrukh Adajania • Nuvama Institutional Equities

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CFO Srinivasan Vaidyanathan clarified that while earlier rate cuts are mostly priced in, the 50 basis point cut from June is not, as repricing takes one to three months. CEO Sashidhar Jagdishan identified several growth triggers, including improved domestic demand from fiscal policies, benign inflation, the upcoming festive season, and renewed momentum in rural, MSME, and corporate segments.

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Chief Financial Officer Srinivasan Vaidyanathan explained that while the February and April rate cuts are mostly priced in, the June cut's impact will lag, affecting yields. MD & CEO Sashidhar Jagdishan detailed that growth will be triggered by improved consumption from fiscal policies and low inflation, particularly during the upcoming festive season. He highlighted opportunities in rural, MSME, and corporate segments as the bank shifts focus back to growth after successfully lowering its credit-deposit ratio.

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CFO Srinivasan Vaidyanathan responded that deposit rate cuts are an industry-wide transmission of policy changes and that HDFC Bank's growth relies on its distribution reach and customer engagement, not price. On priority sector lending, he confirmed the bank meets the aggregate 40% target but has a small shortfall in sub-segments. This is managed through market instruments or RIDF, with a similar and manageable impact on returns regardless of the method used.

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Executive Srinivasan Vaidyanathan stated that deposit rate cuts are a standard industry transmission of policy changes and that HDFC Bank's growth relies on its distribution reach and customer engagement, not on price competition. On priority sector lending, he confirmed the bank meets the 40% aggregate requirement. For sub-segment shortfalls, he explained that the bank uses various instruments like Inter-Bank Participation Certificates (IBPCs), Priority Sector Lending Certificates (PSLCs), or contributions to the Rural Infrastructure Development Fund (RIDF), noting that the financial impact on returns is similar across these alternatives.

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Executive Director Sashidhar Jagdishan explained that while there is no prescribed LDR target, it is in the bank's interest to lower it faster than anticipated to ensure profitable growth, noting Q1's loan growth was a temporary adjustment. CFO Srinivasan Vaidyanathan added that HDB Financial's higher provisions were seasonal, driven by collection challenges that impacted early-stage delinquencies, while overall NPAs remained stable.

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Executive Director Sashidhar Jagdishan explained that while there is no regulatory LDR target, it is in the bank's interest to lower it faster than initially planned, balanced with profitable growth. He noted Q1's slower loan growth is an adjustment and not indicative of the full-year plan. CFO Srinivasan Vaidyanathan added that HDB Financial's higher provisions were seasonal, driven by collection challenges from heatwaves and elections, while underlying NPAs remained stable.

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Anindya Banerjee, Group CFO of ICICI Bank, confirmed the approximate basis point adjustment for the previous quarter's margin under the new method, noting it would smooth out future reporting. Regarding growth, he stated it was too early to predict a revival due to global events but acknowledged that monetary easing could provide a positive impact, suggesting a clearer view would emerge in the next quarter.

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Anindya Banerjee, Group CFO of ICICI Bank, confirmed that the reported NIM for Q4 would have been a few basis points lower under the new methodology. Regarding loan growth, he stated that it was too early to predict a revival, citing global events, and suggested waiting another quarter to form a clearer view.

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Executive Anindya Banerjee clarified that the moderation in loan growth is a function of systemic factors and pricing discipline rather than new credit caution, although prior tightening in unsecured loans is now reflected in the growth figures. He expressed confidence in sustained deposit growth, supported by improved liquidity and the ongoing transmission of policy rate cuts.

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Executive Anindya Banerjee responded that the bank does not set specific loan growth targets but finds deposit flows healthy enough to support lending opportunities. He stated the bank is comfortable with its domestic LDR in the low-to-mid-80s range. Banerjee estimated the impact of revised LCR guidelines to be a 10-15 percentage point reduction and noted that the pace of retail recoveries is normalizing as expected.

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Anindya Banerjee, Executive Director, explained that the strong deposit growth was a result of improved CASA flows in Q4 rather than a strategic shift. He refrained from giving a specific growth outlook but noted no major challenges. Banerjee stated the bank doesn't manage to a specific cost-to-income ratio but expects cost growth to moderate. Regarding the audit, he emphasized that regulatory interactions are confidential and the bank prioritizes operational resilience.

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Srinivasan Vaidyanathan, CFO, clarified that the 17% fee income growth was driven by a 32% year-on-year increase in third-party distribution products, while retail and wholesale fees grew around 15.5% and 5% respectively. Executive Director Sashidhar Jagdishan added that securitization income is not part of fees; it is treated as excess spread and amortized over the loan's life, having no upfront impact. Regarding provisions, Vaidyanathan explained that the reduction in contingent provisions was due to a release of AIF-related provisions following regulatory clarification, and was not related to credit quality.

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