HDFC Bank - Q3 23/24
January 16, 2024
Transcript
Operator (participant)
Ladies and gentlemen, good day, and welcome to HDFC Bank Limited's Q3 FY 2024 earnings conference call on the financial results presented by the management of HDFC Bank Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Srinivasan Vaidyanathan, Chief Financial Officer, HDFC Bank. Thank you, and over to you, sir.
Srinivasan Vaidyanathan (CFO)
Okay. Thank you, Neal. Good evening, and a warm welcome to all the participants. There is an earnings presentation that's published on our website. Please refer to it as appropriate. As we get to it, in the meantime, let's cover a brief on the macroeconomic environment that operated during the quarter before we review the earnings. We continue to see healthy domestic activity, economic activity driven by robust government spending, primarily in capital expenditure, improvement in domestic manufacturing and resilient services sector performance. As you know, the GST collections grew 13% year-over-year. Manufacturing and services PMI continued to remain in the expansionary zone. On the consumption side, improved consumer demand driven by festive spending resulted in robust growth across various sectors.
RBI repo rate unchanged at 6.5% and retained its stance unchanged at withdrawal of accommodation, and modestly reduced its inflation forecast in the second half of the year. As we look ahead, the economic environment is poised for strong growth. India's year-on-year GDP growth for financial year 2024 is estimated at about 7%, and for financial year 2025, GDP growth rate is expected to be around 6.5%, continuing to be one of the fastest growing major economies in the world. Let's go through the key factors for the bank, bank's growth journey. Advances can be referred to in page seven and eight. Gross advances are at INR 24.7 trillion as of end-December, reflecting a sequential momentum of INR 1.1 trillion or 4.9%.
Retail advances grew 3.3% quarter-on-quarter, primarily driven by strong performance in the mortgage business. Retail mortgage disbursements of INR 460 billion during the quarter, grew 18% over prior year. In the CRB business, it continued its strong momentum, registering quarter-on-quarter growth of 6.7%. Wholesale segment, excluding non-individual loans of e-HDFC, grew 1.9% sequentially. Non-individual loans of e-HDFC aggregated to 0.99 trillion, as compared to 1.03 trillion as of last quarter end. Focus on the ground level deposit continues. Looking at pages seven and nine, total deposits as of December end amounted to INR 22.1 trillion, primarily comprising of retail deposits, which is at 84% of total deposits.
Retail deposits, which are the bedrock of the franchise, grew by over INR 530 billion or 2.9% during the quarter, while non-retail deposits reduced by INR 118 billion quarter-on-quarter, resulting in total deposit growth of INR 411 billion, or 1.9% during the quarter. Current account deposits ended the quarter at INR 2.6 trillion, registering a growth of INR 80 billion or 3.2% sequentially, or INR 280 billion, 10.3% over prior year. Savings deposits as of December end, at INR 5.8 trillion, grew INR 99 billion or 1.7% sequentially and over INR 430 billion or 8.3% year-on-year.
Overall, CASA deposits ended the quarter at INR 8.4 trillion, resulting in a CASA ratio of 37.7%. Term deposits aggregated to INR 13.8 trillion as of December end and grew by INR 232 billion or 1.7% during the quarter. On the distribution footprint ex-expansion, referring to page 10, it reflects our branch network, which stood at 8,091 outlets as of December end. Overall, there has been an increase of 908 branches over the last twelve months. During the quarter, we added 146 branches, which is at the rate of 1.6 branches per day. Payment acceptance points are at 4.8 million, a year-on-year growth of 25% as adoption of Vyapar app builds momentum.
In CRB, our rural business reach expanded to 210,000 villages, a growth of 60,000 villages over last year. In the customer franchise building, we added 2.2 million new customer liability relationships during the quarter and around 7.4 million relationships so far in the current fiscal year. Our customer base stands at 93 million customers. This provides an opportunity to further engage and deepen our relationships. In order to position us for greater engagement, we have added 31,000 employees over the last twelve months and 10,000 during the quarter. On cards, we issued 1.6 million new cards in the quarter. Total cards base stands at 19.9 million. You'll see on page 11, balance sheet remains resilient. LCR for the quarter was 110%. Capital adequacy ratio was at 18.4%.
Tier 1 ratio at 16.8%. Let's start with net revenue on pages 12 and 13. Net revenues for the quarter were at INR 396 billion, grew by 25.8% over prior year. Net interest income for the quarter, which is 72% of net revenues and is at, and is at INR 285 billion, grew by 23.9% over prior year. The core net interest margin for the quarter was at 3.4% and on an interest earning asset basis, net interest margin for the quarter was at 3.6%, which flat to prior quarter. Getting to the details of other income on page 15, total other income was at INR 111 billion.
Fees and commission income, which is almost close to 2/3 of the other income, was at INR 69 billion and grew by 15% over prior year. Retail constitutes approximately 94% of fees and commission. Forex and derivatives income, INR 12 billion, was higher by 12% compared to prior year of INR 11 billion. Net trading and Maru-to-market income were at INR 15 billion for the quarter, prior quarter was at about INR 10 billion. Other miscellaneous income of INR 15 billion includes recoveries from written-off accounts and dividends from subsidiaries. Referring to page 16 on operating expenses for the quarter, which were at INR 160 billion, an increase of 28% over prior year. Cost to income ratio for the quarter was at 40.3, cost to assets was at 1.9%.
Coming to asset quality on pages 17-19, the GNPA ratio was at 1.26% compared to 1.34% in prior quarter and 1.23% prior year. Out of the 1.26%, about 15 basis points are standard, thus the core GNPA ratio is at 1.11. However, these are included by us in NPA, as one of the other facilities for the borrower is in NPA. Net NPA ratio for the quarter was 0.31%, prior quarter was at 0.35%. The slippage ratio for the current quarter is at about INR 70 billion or 26 basis points. Last quarter was at about INR 78 billion. During the quarter, recoveries and upgrades were INR 45 billion.
Write-offs in the quarter were at about INR 31 billion. No sale of NPA accounts during the quarter. On the provision side, total provisions reported were around INR 42 billion, and excluding the contingent provision, it was INR 30 billion as against INR 29 billion during prior quarter, and INR 28 billion for the prior year. As I just mentioned, the total provisions in the current quarter included additional contingent provisions of approximately INR 12 billion, and it is pertaining to investments in AIF on a prudent basis. The fair value is, the fair value of these AIF is up by INR 5 billion, but 100% provisions are being taken at book value. The core specific loan loss provision for the quarter was around INR 26 billion, as against INR 25 billion in the prior quarter. The provision coverage ratio was at 75%.
At the end of current quarter, contingent provisions and floating provisions were approximately INR 154 billion, general provisions were INR 105 billion. The total provisions comprising specific, floating, contingent, and generals, generals were about 159% of gross non-performing loans. This is in addition to security held as collateral in several of the cases. In addition, the bank holds contingent provisions of INR 12 billion on a prudent basis to AIF, as I just mentioned. Floating, contingent, and general provisions, excluding that contingent provision on AIF, were about 105 basis points of gross advances as of December end. Coming to credit cost ratios, the total annualized credit cost ratio for the quarter, excluding the contingent provisions I just referred, was at 39 basis points, prior quarter was also at 39 basis points.
Recoveries which are recorded as miscellaneous income amount to 13 basis points of gross advances for the quarter, as against 16 basis points for the prior quarter. The total credit cost ratio, net of recoveries, was at 35 basis points in the current quarter, as compared to 34 basis points in the prior quarter. The profit before tax was at INR 194 billion, grew by 19.8% over prior year. After the INR 15 billion of tax provisions no longer required, consequent to the favorable orders received, net profits after tax for the quarter was at INR 164 billion, grew by 33.5% over prior year. Summaries of subsidiaries can be seen on pages 21 to 26.
On HDB, to cover on HDB, the quality of the book, the quality of the book continues to see sustained improvement, with a gross stage three at 2.25% as of December, against 3.73% as of prior year-end, prior year. Provision coverage on stage three books stood at 68%. Profit after tax for the quarter ended December increased to INR 6.4 billion, against INR 6 billion for the quarter ended September 30. ROA and ROE annualized for the quarter of December stood at 3.1% and 19.9% respectively. Earnings per share for the quarter was at INR 8.04, and book value per share stands at INR 164.6.
Now, getting to HDFC Life on an IGAAP basis, the profit after tax for the quarter ended December was at INR 3.7 billion, grew 16% year-on-year. India embedded value at INR 451 billion, improved 20% compared to prior year. On AMC, quarterly average AUM at INR 5.5 billion, grew 24% year-on-year. Profit after tax for the quarter amounted to INR 4.9 billion, registering year-on-year growth of 33%. Earnings per share for the quarter was at INR 22.9. HDFC ERGO, on an IGAAP basis, profit after tax for the quarter ended December was at INR 1.3 billion, registering growth of 6% year-on-year. Solvency ratio at 187% as of December end.
HSL, our securities company, so total reported net profits for the quarter after tax was INR 2.3 billion as against INR 2 billion in Q2 2023. Earnings per share in the quarter was INR 144, and book value per share stands at INR 1,253. On ESG, keeping up with our CSR commitment, the bank has undertaken multiple projects across India with an aim to address critical developmental issues such as sustainable livelihood, education, soil and water conservation, and key ratings and awards are in page 27 for reference. In summary, our results reflect robustness and growth across various parameters, driven by employees passionately working with our customers to execute the business model.
This has resulted in advances growth sequentially of 4.9% and 2.9% sequential momentum in retail deposit growth. Profit after tax for the quarter increased by 33% versus prior year, delivering return on assets in the quarter of about 2% and return on equity of about 15.8%. Earnings per share reported in the quarter is at INR 21.6 on a standalone bank level, and INR 22.7 at the consolidated bank level. Book value per share on a standalone basis is at INR 556, and on a consolidated basis, it is at INR 576. With that, may I request the operator to open up the line for questions, please?
Operator (participant)
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is on the line of Mahrukh Adajania from Nuvama. Please go ahead.
Mahrukh Adajania (Equity Research Analyst)
Yeah. Hi, good evening. So I have two questions.
Srinivasan Vaidyanathan (CFO)
Good evening.
Mahrukh Adajania (Equity Research Analyst)
Good evening, sir. Sir, I have two questions. Basically, the first one, in general, is on deposit growth. So in general, there's a lot of noise around RBI having a discussion with banks on LDR, plus deposit growth has been very, very tight in November and this December, irrespective of whether you had a discussion with RBI or not. So how do you view deposit growth and LDR from your end? If you could give us some sense, target, or guidance on how LDR will pan out, or what LDR are you looking at, by, in FY 2025? And a related question to that is, that if deposit taking remains tight, irrespective of the LDR debate, then what would you choose?
Would you choose to offer higher rates compared to competition, because your ask rate for deposits is on the higher side now, or would you choose lower margins, if the deposit situation remains like this for, say, two quarters?
Srinivasan Vaidyanathan (CFO)
Okay. Yeah. Thank you. Thank you, Maru, for asking. If anything, anything, come back, but let me start with your first one in terms of the deposits and the CD ratio itself, right? Probably it addresses the broader points that many of them will have. If you think about... First of all, any conversations with the RBI is confidential, and it is between the regulator and the bank. So we will not be able to talk about any individual conversations or anything. Let's keep that to the side, because that's not your main point. Your main point is in terms of the rate of growth of deposit as well as on the CD ratio, given where it is. So let's talk about that.
Now, on the deposits, if you see, on the first thing on the deposits, I do want to mention that how we approached it, here. At the overall level, our deposits grew by INR 411 billion. At the overall level, our deposits were at that level. There's the growth. Yeah, yeah, I'm closer to the mic. I think somebody is saying they can't hear. So INR 411 billion, that's the total growth that we had. Within that, if you see the retail deposit growth, INR 530 billion and 2.9% during the quarter. However, the non-retail deposit reduced by INR 118 billion, INR 118 billion quarter-over-quarter it reduced. Almost 3.3% reduction, sequentially in the non-retail deposit.
Again, very price sensitive. We chose not to participate and get the price thing up, and we wanted to focus more and more on granular there. So that's one. And if you think about the individual component of various deposits, we did. I talked about the current account growing at 3.2. And within the current account, the retail current account constitutes 72% and has been growing 3.8% sequentially. And the savings account deposits, I will come back and talk about the savings as such, right? There is something on the savings, which is we need to see that, right? Where you are seeing two things on savings.
One, given the rate where we are in peak, there's a preference for time deposit. Two, in terms of the spend, we are seeing good amount of spend that is happening from the customers. In our own base, we can see 18%-20% spend from on the issuing side and on the acquiring side from a card standpoint. So people are spending. And one other measure we obviously look at it, aggregate of our card customers, what is the balances they have, right? If you look at the card ANR versus the deposits against it, almost 5.4x they have, right? That means for every 100 that I have as my card balance outstanding, I have 5.4x that in my saving, in my deposit account in the bank.
So, there seems to be more spending room there to go. So that's one. And from a rate cycle point of view, and how do you overcome that is to get more customers. I talked about 2.2 million customers, 7.4. These are the kind of kind of what we have. But coming to the, what does it all do from a deposit group?
Mahrukh Adajania (Equity Research Analyst)
Hello, sir?
Srinivasan Vaidyanathan (CFO)
Yes. I'm here. So I'm getting... If I'm here? Can you hear?
Operator (participant)
Mark, can you hear us?
Srinivasan Vaidyanathan (CFO)
Okay, I'll go ahead, probably... You can hear me, Nirav?
Operator (participant)
Yes, sir, I can hear you.
Mahrukh Adajania (Equity Research Analyst)
Hello.
Operator (participant)
Yes, Mahrukh, now you're audible.
Srinivasan Vaidyanathan (CFO)
So getting to our CD ratio as such, right? Yes, the LDR, which is the CD ratio that you are alluded to, is maybe more than 110%, as we close the quarter. Over the, over a period of time, if you see in this quarter, how did we manage the balance sheet? We had INR 1.15 trillion growth in loans, if you see, and we funded that through INR 4,411 billion on deposits. And, you, you had, investments going down by about INR 485 billion, and cash and cash equivalent by about INR 96 billion. So essentially, we funded that by, the balance sheet somewhat coming, not, not on the asset side. We got that self-funded through some lower investments.
That is what you're seeing in the LCR ratio going down to 110. So some of the securities came down and cash came down as the ITRR ran down on October.
Mahrukh Adajania (Equity Research Analyst)
I think I'm unable to hear you.
Srinivasan Vaidyanathan (CFO)
Nirav, can you hear?
Operator (participant)
Yes, sir. Sir, line for Mahrukh has dropped. We'll move to the next participant. Next question is from the line of Venugopal Garre , from Bernstein. Please go ahead.
Venugopal Garre (Managing Director and Head of Indian Equity Research)
Good evening. Thanks for taking the question.
Srinivasan Vaidyanathan (CFO)
Good evening, good evening.
Venugopal Garre (Managing Director and Head of Indian Equity Research)
I think, question again, later deposits, so one question.
Srinivasan Vaidyanathan (CFO)
Sure.
Venugopal Garre (Managing Director and Head of Indian Equity Research)
When you think about deposits this quarter, in terms of, say, the INR 200 billion that you accreted, if you had to double or triple that number, which is the biggest constraint? Is it the LCR where you're hitting a constraint, or is it simply the cost of deposits, or is it the lack of good lending opportunities? Where are you seeing the biggest constraint?
Srinivasan Vaidyanathan (CFO)
Yes. The biggest constraint is in the area of deposits, right? And if you look at what has happened in the system, very important to look at the liquidity in the system, how it has moved. If you see, it has been positive ever since Q1 2020. The system liquidity has been positive since Q1 2020, and now, it has moved to a negative territory. All the way, if you look, right now, it's the first quarter, full quarter, that Q3, that it is a negative INR 664 billion, right? That's the negative situation the quarter system has gone down by. That's the average, the average that we are seeing. So it is a lack of liquidity in the system.
Rightfully so, if you look at how RBI is managed, there is no rate change that has happened, but the inflation that spiked, four months ago, five months ago, has been managed through, liquidity constraints, right? Through working on the liquidity side. That is what has happened, on a temporary basis. But over the quarter to quarter basis, this is happening, but it is coming after more than three years, 3.5 years, right? We are seeing this, liquidity on negative. It has been there. If you look at last 10 years, there have been several quarters in the past, in 2013 or in 2015, 2013, 2015, where it has been negative. But, this order of magnitude negative, is very recent.
In the last three months, it has become negative. So that deposit is an important ingredient, that is the important constraint to growth, right? And we are at it. And within that, I will tell you, retail has been reasonable. We would have liked retail to do 50% more, 80% more than where we did. But it is the wholesale, if you see, not just a lack of growth, it's a degrowth in the non-retail on the deposit side. That is where it is very price sensitive. We chose not to participate in that price. As much as possible, we have avoided that, so that we can consume some liquidity that we have and at the same time make progress on the asset side. But that can't continue for long, as you know.
Our LDR ratio is at 110-something. So we do need deposits to be kicking in for the loans to be operating. That, that also answers what Mark was asking. Very similar thing that you're asking. Yes, we do need the deposits to be coming in.
Venugopal Garre (Managing Director and Head of Indian Equity Research)
Okay. Thanks, Srini. Thanks. That's all.
Srinivasan Vaidyanathan (CFO)
Thank you very much, yeah.
Operator (participant)
Thank you. Next question is from the line of Suresh Ganapathy, from Macquarie Research. Please go ahead.
Suresh Ganapathy (Managing Director and Head of Financial Research)
Yeah, Srini, so just to understand, what is going to drive your margins in future? Because if I look at it, this quarter, you have sold off INR 50,000 crore. Your LCR is at 110%, so you can't go below that. So there is no excess liquidity assets at a 110% LCR, right? And funding costs may remain elevated. So you're saying, "I want to go from 3.4% to 3.7%." Incremental CASA mobilization is getting to be a challenge. So our term deposit growth is high, so our HDFC Limited, borrowings are sitting there at 7.5%. So deposit growth is finding difficult to meet your own loan growth requirements. When are you going to replace the HDFC Limited liability?
So amidst all these challenges, what will drive your margins, say, from 3.4 to 3.7, say, over the course of next 18 months-24 months? Will it be yield on loans? Because it doesn't look like it can go through cost of funds. That's the first question, and if you can elaborate the movement in margins, some indication as to what will be the components and how are you going to manage the HDFC Limited liability replacement with deposits, point number one. And the second thing is, 1,500 branches doesn't look like it's happening this year because you have only opened 290 branches, oh, sorry, 270 this year. So going to fall short of your 1,500 branches target by a wide margin, what is the thought process there? Over to you, Srini.
Srinivasan Vaidyanathan (CFO)
Okay. Yeah, thank you. I'll take the second one first and start from a branches point of view. Yeah, yes, there are a little more than 500 branches-550 branches in the pipeline as we close the quarter. And we are targeting somewhere maybe 800 branches-1,000 branches or so, right? If we do 1,000 branches, it would be good. A little more than 500 branches-550 branches are in the pipeline, so that's something on the branches. 1,500 is not something that will happen by March, right? 1,000 is something that is possible, but at this time, we are having about 500+ in the pipeline, that's 570, more precise, in the pipeline.
The second aspect of it is in terms of your levers for margin and the deposit as such at total level. If you look at the mix of products that we are having, the mix of products, one of the important lever is the retail mix to be enhanced, right? Retail mix has been continuously coming down, and that is something that will help us to grow. And of late, in the recent times, if you see, we haven't had that kind of a market rate of growth on the unsecured as such. Our personal loan has been growing 2%-3% over the last two quarters, you see. So we do have opportunity space there, that's part of our credit kind of a process, where periodically they calibrate up and down.
And now we believe that, the overall credit, both from a NPA point of view and credit cost point of view, are at a benign state. And so whatever testing and other things may do, we are positioned to have a good growth there, that's one. Retail asset growth, particularly the non-mortgage retail assets, where there is a yield, needs to come up, and the mortgage is another big opportunity that we have, both existing customers, where we have almost 4.8 million pre-approved, pre-qualified database to go through, which we have done. In our existing base who are eligible, that we are making offers and talking about it, and also 5.6 million customers who already have somewhere, we are targeting them.
So that's in terms of the retail mix needs to go up, that is an enhancer for the margin, and to some extent, that picks up on the ROA, too, right? So that's, that is an important mix of this. That's not what we have seen in recent times. Recent times, the wholesale growth has been overwhelming the retail loan growth. We do need to reverse that. That's part of the process in terms of what we are going through. Now, getting to what are the other levers, which you also mentioned, but there are headwinds on that, right? CASA ratio, we are at 37.7, even before merger, we were 42. Over a long period of time, we were 42, 43, thereabouts. We are confident of getting the CASA ratio back up. There are two aspects to the CASA ratio.
One is, the customer spending will abate at some point in time. And the second thing is that we are getting new customers, that is why it is important to get new customers, 2.2 million new customer liability relationships were brought in in this quarter, 7.4 million over the nine-month period. It is important to bring new customers and get them to a maturity. So that is an important thing that we are working on to get that from a CASA ratio to go back up.
We are at the rate cycle, the rates haven't moved for several quarters now, and, by all accounts, we are at the peak of the rate cycle, and, the deposit repricing that needs to happen in a quarter or so should be done, because the rate cycle started in May 2022, and then the CASA should be back to its normal growth, right? So that's something on the CASA ratio. We are waiting and vehemently pursuing that to come. The other aspect that you said, borrowings, whether the borrowings can... how do you replace the borrowings with deposits? Yes, 8% of our funding of our balance sheet was borrowings, now it is 20%-21% is borrowings. We do need to change that from debt to deposit funding.
But one other aspect that we have started to pursue, even in this quarter, is that, the borrowings are, can continue as borrowings. So we, we got INR 7,500 crore of, long-term affordable housing bonds that we have, infrastructure bonds that we issued in this quarter. The economics of that are like a deposit, not like a CASA deposit, but like a time deposit, right? Slightly better than a time deposit, because you obviate the, PSLC cost and, you, because the affordable housing is stacked against it. We do have almost INR 1 trillion of affordable housing in our assets table that we can stack to. The DICGC, the deposit insurance cost is obviated, and, so there are some benefits that come, so it is- it equates to slightly better than a time deposit at an overall level.
But that doesn't mean we don't need CASA, but there are other opportunities on the borrowings, too.
Suresh Ganapathy (Managing Director and Head of Financial Research)
... Okay, and just one final question on cost, Srini. You guys have said you will bring down from 40% to 35% over the course of next five years. I know it's a long journey, the fact that you're opening over number of branches. Can we get to see some benefits, not quantifying, but some benefits in that reduction next year, FY 2025? At least there has to be a journey in that 100 basis point reduction, right? So we were at 40.4 last quarter, and we are at 40.2 or something like that, hard, I mean, around the same range. Do you think it can really come down in the next one year also? Yeah. Sorry. Thanks. Last year. Yeah.
Srinivasan Vaidyanathan (CFO)
Yeah, we are with you, Suresh, on that. Yes, we do expect normally, well, we don't give a forward-looking outlook, but on cost to income, we always said that we want to take it down to the mid-thirties, and that we will progressively take it down and not just towards the back end, but there should be an expectation that the cost to income should be improving. And it is the most, it is a function of certain efficiencies through better digital offering. That's one. Several things that are in the pipeline on technology rationalization such as is one, that is a good payment that should count for it.
And the second thing is that as we work on some of these margins, which is both the asset mix, the CASA mix, and the borrowings mix, moving towards deposits, as we work towards that, the numerator is also an important contributor to get to that.
Suresh Ganapathy (Managing Director and Head of Financial Research)
Okay, thank you so much.
Srinivasan Vaidyanathan (CFO)
Thank you.
Operator (participant)
Thank you. Next question is from the line of Rahul Jain from Goldman Sachs. Please go ahead.
Rahul Jain (Managing Director of India Financials)
Yeah, thanks. Good evening, Srini. Two, three questions.
Srinivasan Vaidyanathan (CFO)
Mm-hmm.
Rahul Jain (Managing Director of India Financials)
Number one, you know, the whole debate between LDR and LCR, for you as a management team, what is it that you're focusing on? I know you've put out, you know, certain strategy for LDR, but right now the LCR has kind of come off to 110%. As I, and as, you know, the previous participant pointed out, 110%, you know, clearly there's not really much room for it to go down. So what really is a key number to focus on for you all?
Srinivasan Vaidyanathan (CFO)
Okay. See, listen, both are important. It's like, you need to walk and chew gum, right? You need to do both, which is, which means, LCR, we have said before that we'd like to operate between 110 to 120. We were at several quarters, 113, 114, 115, thereabout. Then for a quarter we went up, and then, we consumed, as we see in this quarter, we have consumed, right? So it is important, around that level to keep that level of cushion, to some extent, right? That's one on the LCR. LDR, LDR is important, right?
We do, we do want to, to ensure that the mix of funding move, moves more towards deposits, so LDR, LDR is important from that sense. And if you see, currently 110. Then if you look at where can this go? Where can this LDR go? You know that if you look at our LDR prior to merger, it's very important, right? It's a recent discussion that is developing. Prior to merger, our LDR was at 85, right? Then now it's at 110. And if you remove the merger effect of the assets and the deposits on this, the LDR is more like 89, right?
If you look at our historical range of what the bank has operated LDR over a long period of time, around that 85-87, that kind of range, that's where we operated. Historically, if you think about our LDR, that's where we operated. And today, if you strip out the merger effect, it's about 89. So essentially, the LDR is a function of what has happened on the merger. About two quarters run on the merger, which is, we have run through two quarters. And we do have a kind of a pathway. We do want to replace borrowings with deposits and grow further loans with the deposits. That's the kind of a thought process. And so you should expect that the LDR to go down progressively over several quarters to come.
Rahul Jain (Managing Director of India Financials)
Yeah, the reason why I ask this question also, Srini, is because, you know, we've bottomed out in LCR, as in it can't really go down any further. LDR is clearly elevated, so clearly loan growth outlook and the visibility thereon is looking a little difficult given the environment that we are in. So what do we prioritize, growth or margins? If we prioritize growth, then clearly the loan growth has to come off for us to start, you know, bringing these ratios up, you know, to a more acceptable range. Or if you have the growth in margins, clearly takes a knock because you have to offer or maybe increase the deposit rates further. So how are you applying the balance sheet to?
Srinivasan Vaidyanathan (CFO)
Okay, so I do want to mention one thing, right? We are not caught up and we are not into one level of rate of growth as such, right? If you look at our rate of growth, there are sometimes we are slower, sometimes we are faster, but all we have done is that over a period of time, we have always doubled in every four to five years. That's what we have done, right? Quarter or even a year can be different, but over a period of time, that is what we have done. So, growth is not something that we are caught up with, saying this is the rate of growth that we want. Over a period of time, we want to, because that's the investment we have done, we need to harvest returns on this.
So we are focused on returns. So then that takes you to the margin, right? We, we focus on margin or growth. We certainly do not want growth for the sake of growth. If you look at our wholesale growth, we had 1.9% in the quarter. Enough demand was there. There were several banks undercutting and taking, and we let that move on, right? We don't need to be participating. If it does not give returns, we don't want to be there. And so that's something that we are focused on. We want to do the products that are going to give us the returns. Now, on the margin, very important that you, you talked about the margin. Margin is important, but the first it's about the return. What does it give from an overall ROA point of view?
That's the first part. Then it comes, because when you do a product pricing or, or a product choice, to do, to a customer, you're looking at returns more than the margins as such. Margins, to the extent that the mix appropriately gets calibrated, the margins. So over, for us, we have never had this margin conversation because our mix has been predominantly retail, and the retail rate of growth over a decade, if you see, has always outstripped the wholesale. So there was not a necessity, there was no conversation about any margin because it comes with a hefty margin, and it comes with a credit cost also. And our credit cost is at a very benign state of sub-50 basis points right now.
If you look at our credit cost, adjusted for the mortgages, you'll see that the mortgage is because of the denominator in the lower loss rate. The credit cost, what is the mean on the credit cost? 170-80 basis points, that's the mean. Pre-mortgage and merger, 110 basis points. So what we, what... due to the mix change that has impacted the margin, that has come through in the credit cost line. So certainly, we are focused on profitable growth. That is, I hope that answers you in some manner that you are trying to seek.
Rahul Jain (Managing Director of India Financials)
Sure. Just two small questions. The branches, you said, this year maybe 1,000, so is this a new trajectory that we're looking at, or we'll go back to 1,500 or thereabout in the following years?
Srinivasan Vaidyanathan (CFO)
See, again, I'll tell you one other constraint that we are, we are also working through on the branches, with this URC. This, this URC is something that is required, right? The, the mix between the unbanked, rural center, and so on. Selecting that availability, what is that URC that is available so that we are able to get that mix appropriately, right? So there is a targeted percentage with a regulatory target on URC. That is more internally we would do, but we need to have that mix between the URC and the non-URC, so that we can grow progressively across in a balanced manner within the regulatory approvals, right? That is what it is.
So if you look at whether we go back to 1,500, I think Sashi has alluded to that over a period of time, we do want to get to the 13,000, 14,000 type of branches, not just for the sake of branches. It is the geographical presence that we can have, so we can tap into that pockets of both the deposit and lending opportunity in that area. So it's not just deposit, deposits and also the lending opportunity in the area. So it, it, we would be there, but there is no hard kind of... We're not going to push ahead with only one number, but currently, this is what we are seeing.
Rahul Jain (Managing Director of India Financials)
Sure. You've been very generous, you know, with the time. Just a small question on the infra bonds. So you raised some money in the last quarter, I think INR 7,500 crore. Do you have eligible assets even sitting on the balance sheet against which you can keep raising these infra bonds, and how much would that be?
Srinivasan Vaidyanathan (CFO)
We have eligible assets close to INR 1 trillion, as I mentioned. So that's part of which is it can have a qualification in the sense that it you may have PSL benefits, because you will take it off the top line to the extent that you're able to tag the bond and the affordable housing. And you'll get the other benefits that I mentioned, that the cost on the PSLC or the deposit insurance, those things are obviated. But still, any day you need CASA, but to the extent that there are time deposits, this economics is better than even slightly better than the time deposits due to this.
Yes, there are enough asset room, if that is the question, do you have enough assets on the, on the asset side to face off against this infra bond? Yes.
Rahul Jain (Managing Director of India Financials)
Brilliant. Thank you so much, Ashish. Srini, sorry.
Srinivasan Vaidyanathan (CFO)
Thank you.
Operator (participant)
Thank you. Next question is from the line of Kunal Shah from Citigroup. Please go ahead.
Kunal Shah (Equity Research Analyst)
Yeah. Hi, Srini. So given that, overall liquidity is tight, plus, the deposit correction all said and done, this quarter has not been very encouraging. So, when do we see in terms of tweaking the rates, given that now at least the repo rates have sustained? Would we ever look at raising deposit rates beyond 7.2, just to make sure that, we are on our target to get the deposits and at least sustain the growth momentum, even on the asset side? So will there be a thought? No doubt, you have earlier said that, we will look at branch expansion, that's going pretty slow. Even in terms of, like, activation of the field force, still not that great response.
At what time do we look at tweaking the rates just to ensure the deposit correction is what we were envisaging earlier, yeah?
Srinivasan Vaidyanathan (CFO)
Okay. See, deposit pricing is not a tool that we are having in our sales and relationship process, which means it is not a driver. The conversation would never go to say, "I, I am the best price to deposits, come here." It's not a conversation, because that's how, if you look at some of the comparative pricing on our deposits with our peers, we are more or less in that line, right? With, with our top peers, that's the kind of a pricing that we are, we are positioned in. We're not trying to differentiate on the pricing, we're trying to differentiate on other offering features. That's, that's one on, on that. Second, in terms of the market share, you touched upon the growth rate and the market share.
I do want to allude to say that, we do believe that, on an incremental basis, 18%-20% market share, we do garner, right? That's part of, the, the... Whatever is the size that we have got, whatever is the level at which we are growing, we continue to maintain- that superior, rate of growth to the market, gaining market share on an incremental basis, getting that, in, in the high teens to 20 type of, incremental market share. Rates, rates are not at play. We are, we are not- and that is part of the reason why our non-retail deposits de-grew by 3.3% in this quarter.
Kunal Shah (Equity Research Analyst)
Yeah. Okay. And, secondly, with respect to tax writeback, so last time, when there was a writeback, you indicated that, maybe it might not repeat, and we should see it normalizing towards 25 odd percent, but that benefit is still continuing. So if you can highlight in terms of, is it expected to continue? What is leading, actually leading to this kind of, or maybe a lower tax rate, I would say, or maybe this is like the investment gains which have been there. It's on that count, if you can just highlight that. Yeah.
Srinivasan Vaidyanathan (CFO)
The tax benefits that we booked in are a consequence to two things. One, there were certain favorable orders received relating to e-HDFC Limited past assessments, so that's one. And two, there were some favorable orders received relating to the bank for the past years. So that is based on those assessments, we have determined that such provisions are no longer required. That's, and depends from time to time, and there is no such kind of a routine timing that I can predict when these orders come and when we get done. But yes, these are episodic from that sense. We receive favorable orders, we accept, and we take it. And in this quarter, we have had two of them like that, yeah.
Kunal Shah (Equity Research Analyst)
Okay. All orders which have been received, which have been favorable, they are more or less accounted for now?
Srinivasan Vaidyanathan (CFO)
Correct.
Kunal Shah (Equity Research Analyst)
There is nothing which is pending.
Srinivasan Vaidyanathan (CFO)
Correct.
Kunal Shah (Equity Research Analyst)
Okay. Okay, and lastly, if you can highlight in terms of the maturity of the borrowing, HDFC Limited borrowing over the next one year, which is falling due, okay? And any quarter we would see any kind of a volatility in that term maturity.
Srinivasan Vaidyanathan (CFO)
Maturity profile is 20,000-25,000. There's no big maturity, at least over the next 2 quaters-4 quarters. It is evenly there. There's not a spike of INR 1 trillion going away in a quarter or INR 0.5 trillion going away in a quarter, that kind of profile. And I think annually, we do publish the profile of those-
Kunal Shah (Equity Research Analyst)
Yeah.
Srinivasan Vaidyanathan (CFO)
you should soon, soon get to see that. Yeah.
Kunal Shah (Equity Research Analyst)
Oh, okay. Okay, cool. Yeah. Thank you.
Operator (participant)
Thank you. Next question is from Chintan Joshi, from Bernstein. Please, go ahead.
Chintan Joshi (Motilal Oswal)
Hi. Thank you. Can you hear me?
Srinivasan Vaidyanathan (CFO)
Yes, Chintan. Hi, go ahead.
Chintan Joshi (Motilal Oswal)
Yeah. Hi, hi, Srini. So, can I go back to the LD ratio discussion?
Srinivasan Vaidyanathan (CFO)
Yes.
Chintan Joshi (Motilal Oswal)
You know, what I'm hearing from you is that, you know, it does need to come down, but also, you know, growth will remain intact. So I'm trying to square this circle. How like, you know, the only way borrowing, LD ratio improves is if you grow, deposits faster than lending. You know, is that what we should expect, you know, by a cycle inside? And the pace of that, if you can, talk about, you know, do you have some target in mind, or do you look at market conditions and, and do your best? How should, how should we think about this?
Srinivasan Vaidyanathan (CFO)
No, good, thank you. But, one thing I do want to mention is that, that the growth rate, sustainability of the growth rate is not irrespective of what the CD ratio is. CD ratio has to improve, right? As I mentioned, typically, we have been in that mid-80s to high 80s. The merger took it to where it is today, past 100, and, and over a period of time, we do need to, bring it down. So we can't keep, the CD ratio to be growing, all the time. That's not a, that's not a proposition that we are envisaging. So that takes the second part of what you asked in terms of the deposit growth and, and how we should think about, the rate of growth.
Yes, we do envisage that the deposit rate of growth should outpace the loan rate of growth. And for the CD ratio to progressively come in and for the economics to work, the deposit rate of growth should be at least 300 basis points-400 basis points higher than the loan growth. Only then the economics will work better. So yes, that is the kind of approach that we have. Yeah.
Chintan Joshi (Motilal Oswal)
So, the other question I have is on borrowings and debt securities. If I look at, you know, HDFC Limited balance sheet as of FY 2023, there was about INR 1.7 trillion that was going to mature over the next year as of FY 2023. However, you know, we have not seen that mature. If anything, borrowings have gone higher today than the pro forma combined FY 2023 balance sheets. Is this, you know, what was the thinking behind this? Because, you know, one way of looking at this is there was an opportunity to reduce borrowing, but it was not taken because there was profitable lending growth out there. Is that the way you thought about it?
Or, you know, if you can, if you can explain that thinking would be helpful.
Srinivasan Vaidyanathan (CFO)
Okay. See, in this time period, now two quarters have gone by after the merger, and the borrowings have remained or actually gone up in this quarter by almost INR 209 billion. It has gone up. Out of which, about 7,500 is infra bonds, which economics work well, we have taken that. The rest are the either market borrowings or other treasury-related actions. So, so it is only one item, which is the infra bond, which is the borrowing as such that has gone up. The rest are market-related activities which are there, right? In that borrowing. The other aspect of it is that should you expect this to go down?
As the maturity, I think, another person was asking about the maturity itself over the next several quarters. Yes, there are, there are maturities coming, and we anticipate to the extent that the economics work, we will have a similar replacement. If not, it has to be replaced by deposits. And that is part of how the rate of growth of deposits need to outpace the loan growth, otherwise we will not be able to keep up with the loan rate of growth.
Chintan Joshi (Motilal Oswal)
Understood. And finally, on the CRB business, which is, you know, it's growing really fast, what is the overall lending yield of the CRB loan book? So that we can understand, you know, what is the mix impact on the overall lending yield from the CRB, given that it's growing so fast.
Srinivasan Vaidyanathan (CFO)
Okay. See, the CRB yield comes in about between 9%-11%, depending on product. There are certain products that go above that, there are certain products which are around that 8.5%, 9%, but on average, it is slightly above 9% type of yield at an aggregate level. But there are several products, as you know, within the CRB segment, from business banking to emerging corporates, to agriculture loans, to SLI loans, to the commercial vehicle and so on and so forth. So everything, they've got different price points, but on an aggregate average, if you look at it, it's north of 9%.
Chintan Joshi (Motilal Oswal)
So it is in line with the overall, group lending yields. It's not, it's not above, the average of the balance sheet. It is in line with it?
Srinivasan Vaidyanathan (CFO)
It's a good assumption, yes. It is not above the average. It is at that level. It's not dragging the overall average down as such in any meaningful manner, yeah.
Chintan Joshi (Motilal Oswal)
Understood. Thank you.
Operator (participant)
Thank you. Next question is from the line of Nitin Aggarwal from Motilal Oswal. Please go ahead.
Nitin Aggarwal (Head of BFSI Research)
Yeah, hi, good evening, and thanks for the opportunity. Srinivasan, 2, 3 quick questions. One is on the Bandhan Bank stake sale that has happened in this quarter. So if you can quantify the gains, on, on this sale, how much it has grown in, in this quarter from that?
Srinivasan Vaidyanathan (CFO)
Yeah. See, I talked about that, 15 billion, it's a P&L on the fifteen billion or so on the overall I mentioned. So not necessarily... I won't talk about any individual particular item, right? But from a, from an overall point of view, I did talk about the mark to market, and the trading treasury investment portfolio income, 14.7, 15, right, which is there.
Nitin Aggarwal (Head of BFSI Research)
Right. So this is included in the total, but you are not, like, giving the separate number for that?
Srinivasan Vaidyanathan (CFO)
It is included, yes.
Nitin Aggarwal (Head of BFSI Research)
Okay. And, secondly, on the Credila, have you booked the gains in this quarter, or it will come in 4Q? Like, how are we looking at that?
Srinivasan Vaidyanathan (CFO)
Okay. No, Credila, nothing has been booked in the December quarter. We are waiting for regulatory clearance before the transactions can close. So we are working through or the potential purchaser is working through certain things to provide. And we are hopeful to close soon, but there is no particular concrete time that I can give, right? They have to go through approval process before it can conclude.
Nitin Aggarwal (Head of BFSI Research)
Okay. And, lastly, on the contingent provisions, this quarter we have made an equivalent of crores of contingent, so any particular level we want to reach, or is this like the flowback of the excess gain that we are having right now, that we are using that? So any, any thoughts around how do we look at this contingent provision number?
Srinivasan Vaidyanathan (CFO)
Okay. See, the contingent provision that we built in the quarter, it is INR 12.2 billion. We attributed on a prudent basis towards the AIF, right? There is a RBI regulation to account for and look at AIF in a specific manner. So we took that chance to say on a prudent basis, we need to provide, and so we did build a contingent provision against this. As I mentioned, the fair value of the AIF is almost INR 5 billion more than the carrying book value, but we made 100% provision on a prudent basis. So again, we evaluate this quarter to quarter, but that's the process. That's the regimented process to look at it quarter to quarter.
There is no such targeted level of build or release that we have. We'll assess it every quarter and certainly at every year end.
Nitin Aggarwal (Head of BFSI Research)
Right. Okay, thanks so much, Srinivasan. Thanks a lot.
Operator (participant)
Thank you. Next question is from the line of Abhishek Murarka from HSBC. Please go ahead.
Abhishek Murarka (Equity Research Analyst)
Yeah, hi, good evening, Srinivasan. Thanks. Thanks for the opportunity.
Srinivasan Vaidyanathan (CFO)
Good evening, Abhishek.
Abhishek Murarka (Equity Research Analyst)
Sorry. So one question is on, sorry, the unsecured loans. So after, after this RBI, you know, circular on risk-weighted assets and also, you know, just the nudge that has been happening on NBFC as well, what is your approach? So, part one, what is your approach to unsecured loans, especially personal loans, will that slow down? If yes, you know, when you were talking earlier about bringing up the yield on non-mortgage retail assets, how does that affect that strategy? And second, on NBFC, again, what's the approach? Will you limit the percentage mix, or will you, sort of limit the absolute exposure? How do you plan to move ahead?
Srinivasan Vaidyanathan (CFO)
Okay. Yeah, let's look at the retail unsecured that you alluded to. See, the retail unsecured is extremely profitable product, and we like it. And it has to go through our credit filter, and we've been in that for a long time, and one of the best scorecards, we believe we have that. If you look at the delinquency profile on that, it is fantastic. The delinquency profile, the NPA profile is better than a secured book that we have, so we like it. There are times it gets calibrated up and down, and we're confident of growing the book. And let me tell you one important thing on that, unsecured as such.
Pre-merger, on the retail book, our unsecured component was 41%. Post-merger, it is about 22%. So if anything, we created more kind of a runway for a faster growth. But when we say faster growth, we are not talking about something that is a 25%, 30% thereabouts kind of rate of growth. For us, faster growth is to go into high teens to 20 type of rate of growth. That's what we have had in the past. That's why I'm more than telling you what we will do, I'm trying to tell you what we have done, and we think that that is what we will do rather than do something new about it. So we have enough headroom, enough runway, and opportunity on that.
It's extremely profitable product, so that's something to keep in mind on the unsecured NBFC. I think our approach to NBFC has always been, one, for PSL lending, we do want that. For corporate houses, right? Part of various NBFCs affiliated to corporate houses, something that we work with, because that's a much broader relationship across the corporate group that we have. So that's quite profitable, and we like it, and we work through that. One thing that I do want to mention is that, yes, the risk weights did do add in terms of the capital that is required for it. Irrespective of that, we look at the profitability.
They are quite highly profitable at the enhanced risk weight, both ROA and ROE that you see, and we like to go with that.
Abhishek Murarka (Equity Research Analyst)
So there will be no, sort of approach to limit the, let's say, percentage of overall exposure to NBFCs, you know, in light of, whatever, you know, nudges have come from the regulator or, or caution, let's say, that has, that would have come?
Srinivasan Vaidyanathan (CFO)
Correct. The way to think about it is that, where it is to be directed lending, which is priority sector, is number one preference, right? And by the way, some of our NBFCs are government sponsored NBFCs, right? So, and they are not into consumer lending at all, and so I do want to distinguish. Of course, the circular does not distinguish between different categories of NBFCs.
Abhishek Murarka (Equity Research Analyst)
Right.
Srinivasan Vaidyanathan (CFO)
So our NBFC does not necessarily need to be lending only to consumers or of segmentation, which is lower than the bank targeted segmentation for lending, no. NBFCs are also government-sponsored, government-linked NBFCs are there where we have a good relationship with them.
Abhishek Murarka (Equity Research Analyst)
Okay. And just another one on the cross-sell, you know, at the time the models were talking about how, you know, you benefit from cross-selling, you know, your products to the, customers who are coming into the fold. How do we track that, and when do we start seeing those cross-sell benefits? Either in terms of higher retail fee, or can you start disclosing some sort of cross-sell metrics. So how do we track whether that's really accruing or it's taking time?
Srinivasan Vaidyanathan (CFO)
Very, very good that, thanks, you touched upon that. I'll give you one, and I'll tell you the three things that we will start to publish and show to you. One is that we said we want savings accounts, right? That's, that's one, because we want to offer the bank, not just a mortgage product. So if you look at one month, the last month, December, right? We, in October, we showed to the broader world, in terms of how various digital approach that we have taken to offering this bundling of products. Savings account is an important part of that product suite that we offer.
Among the disbursers that we had, in one month, if you take 40,000+ disbursers, first disbursers, because I'm not counting for the disbursements which are ongoing, right, second installment, third installment, leave that to the side. On the first disbursements that have happened in the month, in December, roughly half of it, existing to bank and new to bank. Half of it is that. Among that half, which is the new to bank, almost 65% of them we have penetrated with the savings deposit. So, we've gone with the 65% penetration to start with, right? I'm talking about the December we are, where we are.
That penetration comes with the deposit balance, at least one month-two months of EMI, which is INR 30,000-INR 35,000 on an average, we have taken from the customer base where we have opened. So we'll publish this. So one is savings account as a product, and what is the penetration on that? That's number one. And I give you an example of 65% of new-to-bank first disbursers, we have had that, and we want to take it to 90, 95, 99. We'll keep tracking and reporting that. The second one is the credit cards. We're just beginning on that one. We'll report on that as a product in terms of how we are offering credit cards into that. The third is consumer durable.
Consumer durable, again, one is the offer, the second one is the drawdown, because the customer will not. We make an offer on the consumer durable, customer will draw down a month or a quarter or six months later as the house is ready for the person to move in and do. So and then over a period of time, we will bring in the other products. So insurance also is something that we will start to disclose to see the penetration of penetration level of insurance. The things like the Demat account and the mutual funds and those sort of things, over a period of time we will come with that.
But there are nine products that we will come up with, out of which three are digitally enabled, the rest will be soon, and we will start to report them and show it to you.
Chintan Joshi (Motilal Oswal)
Sure. Thanks. Thanks, it will really help to get some more granularity, because that will help us, you know, figure out how the cross-sell effort is going. So thanks. Thanks for your time. Thanks.
Srinivasan Vaidyanathan (CFO)
Thank you. We'll put up a page or two from next time, and we'll have that.
Chintan Joshi (Motilal Oswal)
Sure. Thank you.
Operator (participant)
Thank you. Next question is from the line of Anand Bhavnani from WhiteOak Capital. Please go ahead.
Anand Bhavnani (Director of Investments)
Thank you for the opportunity. I have a question on the consumer behavior, and this is more to do with, you know, seeing revolving rates on credit card being, you know, much lower than pre-COVID levels. Similarly, on the current account, on the savings account side, the growth rate is weak. So can one surmise that because of, you know, good apps available on mobile devices, consumers are now being very, you know, active and not giving in to the inertia on both the asset side, the credit cards, they are not revolving, they are just taking personal loan or something. And similarly, on the liability side, that's what consumers are, moving away their deposits to, to an account where they are getting 7%-8%, whereas we are giving like a 3.5%.
Have you done any behavior analysis on both asset as well as liability side, to see how across the broad spectrum of your customers, is there any data to prove or through these theses?
Srinivasan Vaidyanathan (CFO)
See, in terms of the customers, you touched upon the revolver. Thank you. Thank you for touching that. See, the revolvers haven't grown. If anything, actually, in this quarter, we did see slight reduction in revolver percentage, right? We're now seeing that. And in some other question, I did allude to how card bunch of customers, customers who have credit cards and savings accounts with us, when you see, their balances are 5x, little more than 5x, 5.4x, their balances is what they have in their deposit accounts. So, that is also healthy. It was less than four, three years ago, now it is 5.4, so it has grown. That, that's the second thing.
The third thing, in terms of whether some of the digital properties are enabling less use of card revolving and alternatives, in our customer segment, that's not something that we are seeing, because it is more of a the segment that we have chosen and working on is little more higher rates. That means little more higher score customers. I think we have talked about the revolvers, one month-three months and four months-six months and six plus months, call it six plus months revolvers. Across these three revolving categories, we have not seen pickup happening, so that's part of the customer base, and that's part of the cash that they have.
And or some of them have got impacted through the COVID and come out of it and not survived and come through it, and not indulging in any of these things. And some of them who do take it for short period of time, right? So that's the one month-three months category. If you see, they take for some short personal loan or they don't want a two-year or a three-year or whatever the tenor personal loan, they want it for a short period of time, they don't mind taking it.
So we do think that the category is very attractive, and very nascent, because we know that there are only kind of 90 million, 100 million credit cards in this country, and we would expect that to be north of 500 million. So we have enormous room to go. The other aspect is that with our alternative payments, UPI or anything, those kind of things, or direct debit to system, whether those things are, that would only increase the balances in the savings account. So if somebody who is using UPI previously was drawing down cash and paying through, so the cash was going out of the bank. Now, the cash is in the bank account and is using UPI, so that it only enhances, anybody using UPI only enhances balances in the account.
So there are pluses and minuses across all of these, but at the end of the day, the customer segmentation that we are working with, we're confident that that will bring in the balances and grow as the economy grows.
Anand Bhavnani (Director of Investments)
Sure. But the question is whether the minuses are, you know, overwhelming the pluses? Because the account opening these days is less like a, an art affair, and if a bank is offering 7%-8%, and we are seeing these banks which are offering 7%-8%, are seeing very high growth rates on the liability side. So is it that the smart customers of yours are now using these properties, and it, it's a structural change, and hence it will be a headwind to our deposit efficient targets?
Srinivasan Vaidyanathan (CFO)
Okay, but there are two, again, two things I want to respond to. One is the, if you look at us from a market share point of view, we, we have been gaining market share. Our market share is at about, ten and a half percent, and, it continues to grow. On an incremental basis, I think I alluded to, our assessment is eighteen to twenty percent. So that's, we are keeping up with that. Yes, there may be some customers who go, but from our rate offering point of view, we offer... You're talking about the savings account rate, but on a time, the savings account rate is what we offer 3, 3.255, 3.5. On the time deposits, we are more or less in line with the competition, significant, peers.
If you see, we are more or less in line with that on a, on a time deposit rate point of view. From a savings account, yes, we do continue to. That doesn't mean somebody else cannot grow. We are, we are growing. And, think about it, still, the public sector banks, from where all of the private sector banks, including the ones that you alluded to, offering 7% or 8% on savings accounts, those are all in the private segment, private sector segment. And the market share there is coming from, from public sector, because all the private sector banks are gaining market share.
Anand Bhavnani (Director of Investments)
Sure. Thank you, and all the best.
Srinivasan Vaidyanathan (CFO)
Thank you.
Operator (participant)
Thank you. Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to Mr. Vaidyanathan for closing comments. Over to you, sir.
Srinivasan Vaidyanathan (CFO)
Okay. Thank you, Nirav. So thank you all for participating. We appreciate you dialing in at this hour. If any more questions, comments, or clarifications required, please feel free to reach out to us. Our investor relations team would be happy to connect directly with you or with me, and we can have a conversation. Thank you. Bye-bye.
Operator (participant)
Thank you very much. On behalf of HDFC Bank Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.